Wall Street plunges on recessionary fears following statements from US President Donald Trump.
Raised tariffs and continued trade wars are hitting global markets, Business needs certainty. They’re not getting it from Trump.
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast site, my own website, the Apple Podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at www.businessacumen.biz.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
I am Leon Gettler. My job is to review and monitor the week’s news in business, finance and economics. I bring it all to you, every week.
This is episode number 6 in our series for 2025 and today’s date is Friday March 14.
First, I’ll be talking to Trilogy Hotels CEO Scott Boyes to discuss the adoption of independent hotel management models in Australia – a relatively new and unfamiliar model in Australia, despite being the preferred and most predominant model in both the US and Europe.
And I’ll be talking to AMP Capital chief economist Shane Oliver about the latest profit reporting season.
But first, let’s talk to Scott Boyes.
So what’s happening in the news.
And so it’s come to this. Global markets are reeling after Donald Trump refused to dismiss recession fears. The president declined to rule out a recession hitting the US economy this year after the Atlanta Fed warned of an economic contraction in the first quarter of the year. When asked whether the world’s largest economy was heading toward recession, Trump responded that a “period of transition” was taking place. “I hate to predict things like that. There is a period of transition, because what we’re doing is very big. “We’re bringing wealth back to America, that’s a big thing. And there are always periods of, it takes a little. It takes a little time, but I think it should be great for us,” Trump said on Sunday. On Wall Street, the S&P 500 is now more than 9% from its all-time high. In the UK, the FTSE 100 quickly fell into the red as Trump’s trade war and uneasy comments lingered over markets. The UK’s flagship stock index hit a one month low, down as much as 0.8%.. Germany’s Dax lost 0.8% and Cac 40 in Paris fell 0.4% as global markets reeled from the economic uncertainty in the US. Russ Mould, investment director at AJ Bell, said: “President Donald Trump’s failure to dismiss a question about the country potentially heading towards recession as he talked about a ‘period of transition’ for the economy saw yields on US government debt slide as investors begin to assume a downturn is coming. If tariffs are about making America rich again, Wall Street clearly is not buying it,” FWDBONDS’ chief economist Chris Rupkey said. “The stock market is the premier leading indicator of the US economy and right now investors are telling you the economy is heading towards recession and it will be a miracle if Trump’s trade war doesn’t cause the first recession since the pandemic.”
And US president Donald Trump has declared his intention to slap an additional 25% duty on Canadian steel and aluminum imports, bringing the total to 50%. The move, effective from Wednesday, is rattling global trade flows and sparking market reactions that extend far beyond the metals sector. Trump blamed Ontario’s recent decision to impose a 25% surcharge on electricity exports to the US. Ontario Premier Doug Ford, a prominent conservative politician, introduced the electricity tariffs impacting New York, Minnesota and Michigan amid widespread Canadian outrage over Trump’s tariffs and his repeated suggestions that the US should annex Canada. Ford said he would not back down until Trump’s tariffs are “gone for good,” and has previously said he would not hesitate to shut the electricity off completely, if Trump escalates. Canada has also imposed tariffs on US goods, including orange juice and footwear. Trump’s tariff escalation comes as Canada prepares for a leadership change with Mark Carney set to replace Justin Trudeau as prime minister. In the lengthy social media post, Trump also threatened to “substantially increase” tariffs on Canadian auto parts on 2 April – which he said “will, essentially, permanently shut down the automobile manufacturing business in Canada.” – if Canada does not drop what he said were “outrageous” tariffs on US dairy products and other goods. He will declare a “national emergency on electricity” in response to Canada’s measures, Trump added. Trump forcefully repeated his demand for Canada to become the 51st US state, claiming it would “make all tariffs, and everything else, totally disappear.” Trump’s move could impact US businesses as Canada is the main source of aluminium for US industry, and the auto plants he is threatening are owned by US automakers.
The Federal Reserve won’t lower interest rates at its policy meeting next week, but could deliver the first of a set of rapid-fire reductions in borrowing costs in June if rising fears of an economic downturn triggered by a trade war materialize. At least that’s where the betting is in futures markets, where contracts that settle to the Fed’s policy rate were increasingly priced for quarter-percentage-point reductions in June, July and October following U.S. President Donald Trump’s remarks last weekend about a “period of transition” as he ratchets up tariffs on China, Canada and Mexico. U.S. stocks and Treasury yields also dropped on Monday on concern that his comments signaled a coming recession. Fed Chair Jerome Powell on Friday said the U.S. central bank is in no rush to cut rates, with the labor market still strong, inflation on a bumpy path toward the U.S. central bank’s 2% goal, and uncertainty high over the effect of Trump’s trade, fiscal, immigration and regulatory policies
And the chances of Australia getting an exemption from the tariffs has hit zero after Donald Trump has lashed Malcolm Turnbull as a “weak and ineffective leader” in an extraordinary personal attack on the last Australian prime minister to obtain a tariff exemption from the United States in 2018. “Malcolm Turnbull, the former prime minister of Australia who was always leading that wonderful country from ‘behind’, never understood what was going on in China, nor did he have the capacity to do so,” Mr Trump wrote in a late-night post on social media platform Truth Social. “I always thought he was a weak and ineffective leader and, obviously, Australians agreed with me!” The outburst from Mr Trump appeared to be in response to a poorly-timed interview Mr Turnbull gave to Bloomberg Australia in which he described the US president as “chaotic, rude, abusive and erratic” and warned his poor treatment of allies would ultimately benefit China, at a time when the two major powers are vying for influence. Mr Turnbull later doubled down on his critique of Mr Trump, telling the ABC’s 7.30 it was up to the leaders of friendly countries, like Australia, to stand up to the US president and to be frank with voters about the fact that the world had changed. He also said the idea of allies having to “suck up” to Mr Trump or join “the conga line of sycophants creeping through the White House” to avoid punishing tariffs was ludicrous. “The impact that Trump is having on the world, on the Western alliance, on markets, on our economies — I mean, these are matters that we have to talk about,” he told 7.30. “We cannot continue this bipartisan gas-lighting that is going on at the moment.” Mr Turnbull told 7.30 that Trump’s attitude towards Western allies, which had seen him “helping Putin in Ukraine”, could send some into alliances with China. All this coincides with Australia’s first monthly trade surplus with the United States since records began in the 1980s undermining Prime Minister Anthony Albanese’s argument for Donald Trump to grant an exemption from tariffs. A surprise surge in gold exports to the US helped Australia sell more goods to the US than what America sold to Australia in January, according to an analysis of trade data released on Tuesday.
S&P Global has estimated that insurers would lose $2 billion from Alfred. Floods in northern NSW in 2022 cost insurers $6.4 billion while the last big tropical cyclone Debbie triggered claims of about $1.8 billion. AMP Capital chief economist Shane Oliver said there was also a risk that damage to food growing-regions would push up prices and temporarily stoke inflation. “Fruit and vegetable prices get whacked by these types of events,” he said. Meanwhile, business owners in Lismore say they’ll lose at least a week’s worth of trade after the city was forced to shut down, resulting in them having to move stock and equipment out of the danger zone. And that came three years after they were hit by catastrophic floods. At the same time, industries across northern NSW and Queensland have begun counting the cost of a widespread shutdown caused by ex-cyclone Alfred, where beef producers were dealt a hit to lucrative exports, fruit and vegetable farmers braced for a wipeout of crops and freight companies had operations paused
Jim Chalmers will avoid significant spending cuts or revenue measures in the March budget to pay for a growing list of expensive election commitments and a one-off hit from Cyclone Alfred. Labor is now preparing to shift to campaign mode this week and claim Peter Dutton will be a risk to key services, wages and the economy. Anthony Albanese’s preferred election date of April 12 had been so set in stone that many senior ministers and advisers were understood to have adopted perfunctory approaches during preliminary meetings for a March 25 budget and put off major decisions. The execution of major policy announcements, funding allocations and pre-election media strategies since early January were predicated on an April timeline. Mr Albanese had endorsed a plan to head to the polls immediately after Roger Cook-led Labor’s WA election victory on Saturday. That’s now been delayed because of Alfred. Albanese has ruled out an April 12 election and the poll will be held on May 3, 10 or 17. The Albanese government will now use the WA ALP landslide to help propel a pseudo eight-week campaign, with ALP figures believing the March 25 budget can highlight its management of the economy in the same way Mr Cook did with Perth voters. Labor insiders say the government’s record of reducing inflation while keeping unemployment low will be a potent argument in the campaign, as long as it is conveyed “sensitively” to an electorate struggling with cost of living. Labor MPs Rob Mitchell and Mike Freelander have backed income-tax cuts as part of a cost-of-living package for middle-income Australians but tax reform is unlikely, with the focus instead to be on more temporary living relief and the guarantee of growing spending on health, education and emergency management services. Speaking in Canberra on Sunday, Mr Albanese said his government was considering _budget policies to “assist people” struggling with cost-of-living pressures. Mr Albanese, who also appeared with Dr Chalmers in the Treasurer’s flood-affected seat of Rankin, said addressing cost of living was “one of the defining characteristics of my term of government”.
While this is going on, the subterranean wind farm fight has burst into an ugly parliament stoush. We’ve seen accusations of censorship and misinformation flying around parliament as senators duel over offshore wind farms, foreshadowing high stakes battles in the upcoming federal election on an issue that both parties think will play in their favour in marginal seats in NSW, Victoria and WA. Offshore wind became an election flash point for Prime Minister Anthony Albanese, when he was heckled by anti-wind farm protesters at a press conference in Wollongong in February. In Canberra, Nationals Senator Ross Cadell drew a furious response when he accused his fellow members of the Senate Environment Committee of “grave disregard” for concerned community members, after they decided to “mothball” a hearing of the offshore wind inquiry with just 24 hours notice last week. “They have travelled from across the country to be heard inside the halls of democracy, only to be told on Wednesday their voice wasn’t important enough to hold an inquiry,” Cadell said. The chairwoman of the powerful committee, Labor Senator Karen Grogan, rejected all of Cadell’s claims and accused him of “deliberate misinformation” that amounted to “nothing more than a self-serving political stunt”. The deputy chairwoman of the committee, Greens Senator Sarah Hanson-Young said Cadell’s claims may constitute contempt of the Senate, an offence which applies to Senators who issue “any false or misleading report” of a committee.
Qantas faces an 18-month wait for the new aircraft needed to lift standards of service and on-time performance after a decade of under-investment in its fleet under former boss Alan Joyce. Chairman John Mullen says the airline is “starting to get its mojo” back after the operational and strategic problems that led to Mr Joyce’s early retirement in September 2023. Mr Joyce’s successor, Vanessa Hudson, last year reached a $100m settlement with the Australian Competition & Consumer Commission for misleading consumers over cancelled flights. Mr Mullen, who has led the board for six months, said the airline was behind on the delivery of new aircraft, which was affecting the customer experience at a time when demand for air travel is strong. Qantas’ ageing fleet “should have been replaced earlier” but couldn’t be because of problems in getting the planes from the manufacturer. “It means that customers are still not getting the optimum experience – whether it is the cabin experience or whether it is a mechanical (issue) on an old aircraft,” Mr Mullen said. “Unless you’ve got a lot of spare capacity, that cascades down through a whole lot of flights.” This exposed Qantas to the accusation it was now making good profits but “the service is crap”, its chairman admitted. “We need to have another year or 18 months of the new aircraft coming on to start to deserve the respect that hopefully we will generate,” he said. He said the new capital investment program would “really start to transform things and increase capacity.” But he said Qantas had to work on restoring its standing with the Australian public. “You cant take reputation and respect for granted,” he said. “There are still a lot of people out there who are disappointed by what happened to Qantas.” He said the company’s new board and management were “drawing a line in the sand” on the issues of their predecessors.
Meanwhile, all eyes are on Star Entertainment as it negotiates with a property funds management giant that owns a string of major hotels for a $750 million refinancing package that would secure the ailing casino group’s long-term financial future. The prospective financier is Salter Brothers, led by wealthy businessmen Paul and Robert Salter and backed by offshore funds. It has until March 18 to finalise the funding package. Last week, Hong Kong-based conglomerates Chow Tai Fook Enterprises and Far East Consortium also confirmed they had reached a $53 million deal with Star, which will see the casino operator exit ownership its part-owned Queen’s Wharf Brisbane project. Shares in the casino operator have been suspended since 3 March after the company failed to lodge its half-year report before the market’s deadline
And that’s it for this week.
And next week, I’ll be talking to Angelina Wu, the co-founder and CEO of investmentmarkets.com.au. It has been called Google for investments. How broad does she intend to make it? We’ll talk about how she would describe her market.
And I’ll be talking to independent economist Nicholas Gruen about what to make of impact of Trump’s tariffs.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com
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And I’m looking forward to bringing you Talking Business next week.
