Winners and Losers of '25

Hello, I'm Alan Kohler, Founder of Urika Report, which is now part of Intelligence, Investor, and Finance, presenter and columnist for the ABC. I'm Stephen McIntyre and Intelligence Investor, Founder of Craki and Chairholder, Activist, and I'm James Thompson, Senior Shonser, Clear Columnist at the Australian Financial Review. And we all three of us are the money cafe for our final money cafe over the year. And not only are we all three here in the cafe, we've got what, about a dozen people joining us from who are our listeners, who have joined us in my parents. And your parents, James, is different to you too, that's fantastic. Great, well, good day guys, let's get stuck in now, we're going to talk about the winners and losers for 2025. Yes. Who's your winner? My winner. I'll go first. It's two guys that most people haven't heard of, Oliver Curtis and Tim Rosenfield. So they are a joy. They are the, everyone deserves a second chance, they are the founders, the co-founders of a company called Fermus, which is an AI company, of course it is, it has AI cooling technology, it wants to build AI factories. In October, this thing was valued at 1.9 billion, six weeks later, the valuation went up to six billion. Now, Sam Altman's good, Jensen Huang at Navidia's good, but I don't think anyone can beat that sort of gain in wealth in six weeks, like that. So where is an Australian company that is building data centers in Tasmania and Sydney and Melbourne with another company called CDC? I have no idea whether this thing is going to work or not, I have no idea whether this will all end in tears, but that gain in wealth is incredible. Data centers are going to work, aren't they? Well, yeah, how many data centers do we need, do we need the ones in space that Elon Musk is hoping to build? I don't know, but it's an incredible. Well, it's under the pitch, I see Google talks about data centers in space every minute of the day. I know, I know, I'm not sure I believe it, but anyway, well done to those guys as Stephen alluded to Oliver Curtis did spend time in the big house for insider trading, but this is a pretty incredible comeback and good on him. Is your winner, Stephen? Oh, look, I was wrestling with a few, but I've settled on Elon Musk because he has, he's unflushable, okay? He has survived everything, his share price is at a near record high today. He's got his pay deal up, you know, the trillion dollar pay, although he's never going to be a trillion dollar pay. He survived those, he survived calling Trump out for being in the Epstein collials. He's talking about a SpaceX float with a valuation of more than a trillion and he's the richest man in the world and Twitter hasn't bankrupted him and I made him, one of us made him loser of the year two or three years ago at this very event. And he, as I said, he's unflushable and he's just, the richest man in the world is the most powerful man and he's survived everything much as I hate him. He's just incredible that he keeps going and with all these talk about robotics and autonomous vehicles. It doesn't matter these losing market share with these electric vehicles, his share price is at a record high and he's richest by the world. Yeah. And he hasn't been inside the big house yet. He has not. He has not. Well, he's been inside the White House a little bit, but not the big house. Yeah. Who's your winner, Owen? Well, I was going to go for Jensen Huang as the CEO of NVIDIA, but actually I've decided to go for somebody who probably nobody's heard of as Sam Riggle, who is the CEO of an founder of, I think, of Sunrise Energy Metals. Now, the thing is that what I was focusing on is the big deal that Albanese did with Trump about critical minerals and rare earths, right? Yep. And a lot of Australian stocks took off after that, that dig up rare earths and critical minerals and are a few of rare earths, for example, was one of them and the eluka and so on. But they all come down again, except for Sunrise Energy Metals, which has got a scandium deposit in New South Wales. Right. Right in the middle of New South Wales, not very far from Forbes, and its share price has gone from a half a cent to seven and a half cents, which is absolutely heady stuff. Yeah. Right? Yeah. And it stayed there. Yeah. And so, and the thing is that Scandium is a very, you know, needed thing, apparently. And not many people have got it. There you go. And Sam's got it. Yeah. He's not quite Jensen Wong, though, isn't it? No, no, no, I'm not suggesting that. No, no. It's a bit of a winner. I mean, let's move on to our losers, shall we? I'll go first again. My loser is Jamie Ferris. Oh, yes. Corporate travel management. So this is an ASX listed company. It's got a national value on paper of $2.4 billion, but its shares haven't traded since August, when the auditor found some irregularities in its accounts that meant it couldn't sign off on the 2025 numbers. The board assured us that there was nothing to worry about. These were mere timing issues. And then in the end of October, we learnt actually, Corporate travel management has overcharged British customers, including the British government, to the tune of about $160 million bucks and needs to pay that back. Now, it's got enough cash to meet that, but whether this company survives in its current form is very doubtful, the shares have still not traded and probably won't trade until some time in early 2026. And the great question is, what are they worth now? Are they worth 80% what? Less than they were. Are they worth 90% less than they were? Does this thing go to zero? It's an incredible sort of story of suspended animation. And there's been a lot of shockers this year on the ASX. James Hardy, ASX itself, HealthScope, MonashIVF, I could name ten of them, but I reckon Corporate travel management is particularly stinky. I agree with that. Yes. Now, I might be recency bias, but I'm going to go with Shane Elliott. Even Alan Joyce didn't sue for his band bonuses. Yes. So come out and say, you're the smallest bank you've underperformed. You've had all sorts of regulatory issues. The board have come in and cut bonuses by $32 million across the management team, including $3.5 million for the boss who they've ousted, because the board were going to get REM strikes and huge protest votes if they didn't take action. The board had to be seen to take action as Shane Elliott, tone deaf, already worth at least $30 million, is suing in the New South Wales Supreme Court for $13.5 million. I mean, it's just stinky of a big four bank. Well, he's very rich already to say it could be a greedy banker and say more, more, more. He couldn't care less. Right. No. Well, he doesn't care. Well, I think actually he figures out he's not going to get another gig somewhere. And so he's got it. He's got it. He's going for a broke here. Yeah. I think it's not just the bank he's taking on. Because he's taking on apra. Correct. And the government, because they've put these rules in place to claw back bonuses in these exact circumstances. The board has, in a way, followed the law. It's a very. Do we think he's got a case? It's hard to see. Yeah. But look, he may have some agreement with the board that he feels was made in good faith and he wants to test it. But he's just damaging. I mean, the perception of bankers being greedy, gouging, self-interested. He's just giving the whole sector a bad name by doing this. Alan Joyce just sucked it up. He had a stronger case, Alan Joyce. He copped a $10 million hit and he just said, "God, imagine the PR backlash if I sue." He's going to do a book instead, Alan Joyce. Shane Elliott should forget about suing and should write a book. Write a book to get it off his chest. Nobody's really going to read that. No. The AGM, or the ANZ AGM is on tomorrow, Thursday. Any chance Shane turns up. That would be good. Like the late great Norby Clark, we're not be Clark turned up at the NAB AGM, complaining about armoured for who's a salary seller. Yeah, there you go. Yeah. No, I think he'll be off-consulting with his barristers about his, I mean, this could cost him millions. It's been Robert Smith, you know, it doesn't often work to sue town hall, to sue a bigger organisation. And ANZ has got a few more resources than him. Yeah, anyway. What about you, Alan? Who's your loser? Well, I think, I think Tim Ford, former CEO of Treasury Winor State, I mean, the thing about Treasury is, how do you, how do you mark up a company that has the Australia's, probably Australia's, only luxury brand, yeah, penfolds, and the stocks down 60%. Yeah. I mean, yeah, as you say, there's plenty of big losers. Treasury Winor State is a big loser and they've stuffed it up in, in the US and now in China as well. Yeah, it's possibly all the things that aren't, that aren't penfolds that have really, yeah, of course. Yeah, of course. That's right. But the thing is, you know, they've stuffed the company up here, by doing these other things. Yeah. If they just stuck with penfolds. Well, I think, Ford's been trying to push in that direction but it's just hard to get rid of these other penfolds. And then they run their AGMs to early, 10 o'clock in the morning, the free wine is flowing at 11.10 a.m., that was too early as well. So for that, he deserves it. Sounds not even over the, I know, I know. So come on, Treasury Winor State. Okay. All right. Now, what are, what are the big stories to watch as well and our big prediction of the biggest issue coming up, James? Our interest rates. So I think that we know the RBA is going to hike, looks like Canada is going to hike Europe will hike. Will the Fed, will the Federal Reserve in the US eventually be forced to raise interest rates? Donald Trump obviously wants them to be cut, but bond yields are telling us that rates are going to go higher. And if they do, every major share market bubble in history has been popped by rising interest rates. And it would be remarkable if history didn't repeat. So that is the thing to watch. Well, yeah, but in that context, the question, the story to watch then is whether the Supreme Court allows Trump to sack Lisa Cook, the governor of the Federal Reserve, who is trying to sack for some past, distant past apparent, you know, like Trumped up charge, so that's before the Supreme Court, if they agree and allow him to sack Louis Lisa Cook, he could actually get control of the Federal Reserve, and you know, it's not absolutely a done deal in that case, but certainly closer, he won't get control of it by just appointing Kevin Hassett or Kevin Wash as chairman to replace Jerome Powell because Powell actually stays on for another 12 months as a governor. So the number, his number stays as a vote. But anyway, I mean, certainly the case that if Trump manages to get control in some way of the Federal Reserve, they won't be harking interest rates. Yeah, yeah. No, I think all of that, all of the drama around the Fed's going to be fascinating to watch. But this is just US interest rates. In terms of the Mr. interest rates won't move for two years, Alan Kohler. What's going to happen with Australian interest rates? I mean, is it next move up or down, Alan? Oh, it's not going to move for two years. I'm the broken watch that's stopped, you know. It's shallowish. No, they're going on. They're going on to predictions in a moment, right? Yeah. But, yes, I mean, I'm going to be watching what happens with humanoid robots. Yes, I love humanoid robots. Well, I don't, I don't know, sure, I love them or not. I just think it's an amazing story. Yeah. Yeah. There's all these companies that are racing to develop humanoid robots, and what's going to happen to the world, when these things suddenly start appearing everywhere. So, you've spent more time on this than any of us. Do you reckon it's, like, is it, are we three years away? Yeah. Three or five or something like that? Yeah. From seeing these walking around the streets here, walking around the streets, but being used in Australia. Well, they're starting to ship them in China now, like just a few months ago, and selling them. So, they're actually being sold now to companies, mainly to, you know, to businesses in warehouses and all that stuff, mainly behind the scenes. But we're not far off having humanoid robots. I think it's a bit of a change for humanity. Yeah. Yeah. Well, my big story to watch is AI correction, ongoing crypto crash. I think it all ties into Trump, and Trump, into the midterms, where his power will be clipped. So, I think we've reached peak Trump, peak AI bubble, and, you know. Peak Trump. Peak Trump. I think we've reached peak Trump. I mean, he's suing the BBC for $10 billion dollars overnight. I mean, he should have been out all of our loser of the year. We should be defending journalism from this corrupt scoundrel. But, yeah, I think AI correction, it is a bubble, and I'm going to predict that it's going to come off. All those big magnificent seven are going to come off by. Close to 20%. Wow. In the coming 12 months. Boom. Well, I reckon it's already happening. If you look at, Deutsche Bank's been tracking a basket of like 23 AI stocks since the end of October, 20 of them are lower. And if you look at companies like Core Weave and Iroquil, where the real speculation was happening, they're down 50% and 40% over that period. I reckon we might be. We might have seen that the real froth has started to come off. Company like Iron, you know, that pivoted from being a Bitcoin miner to a data center company. They're off 60% in the last, you know, eight weeks or so. So, I think we start to see. So, the peripheral players. The peripheral players. Yeah. Yeah. That's a big set, whether the Magnificent Seven. I think the video is in a league of its own, because it's CapEx. Yeah. Challenge is not as much as the others. Yeah. But I think. Listen to one of your podcasts about the fact that the video's got four clients, who are producing 60% of their revenue, and they're doing 88 billion a quarter. Yeah. Yeah. So, that means that the four of them are spending 15 billion a quarter on the video. Yeah. Just on the video. Just on chips. So, the people spending that money, which is the Amazon's and the Google's and the Facebook's and Microsoft's, I think that's the bubble. They can't sustain. They've destroyed all their positive cash flow. How can they go from the most cash-generative organisations ever to actually be borrowing lots of money? They've got no debt. They've got no debt. They can't afford to borrow the money. But anyway, I think you're right. It is the other big story of 2026. 2026. I spoke to. I spoke to a bloke yesterday who's trying to start Australia's first AI, a large language model. Right, okay. It's primarily called Sovereign AI, he's calling it. Right. And he's raising $80 million to buy 256 Nvidia Blackwell GPUs, which is what. Which is cost. You know, it cost him $80 million and $256 Blackwell GPUs is what you need to train a large language model. And he's training it. You might be a little bit too late, perhaps maybe hasn't got the glowing scale. Oh, maybe. No, no, but he records that there's a place for an Australian one that has this Australian bias. You know. I remember hearing at Lassian Boss Mike Cannon Brooks give a speech, probably 15 years ago, and his overwhelming message was, "Everyone in Australia who thinks they can just replicate what's happening in the US are diluting themselves because we are 2% of their size." So don't invest in anyone who says, "I'm just copying what's happening in America here." Oh, Alan's poor man. Alan's heart broken. Alan's bloke sounds like just another one of those local lousy copycats. Geez. Sorry, that sounds a bit. He's. He's. Oh, look, good on him, I reckon. It'll be a great, good on him. It's a really. He's in this week's Talking Finance podcast. There you go. A further intelligent investor, if you want to. If anyone wants to listen to that. And he's going to be a big debate here. You know, there's. The plans are to double the amount of data centers we've got in the next 12 months. Not really clear where the power comes from for that. It's not really clear who profits from that other than some big tech companies who don't pay any tax here. There's some really prickly issues around AI for country like Australia. So, listen, are we going to review our predictions for the year? Yeah, we've got a question from Kurt. A very pointed question for Kurt. Oh, okay. Do you want to help us with that? Do that now? Do you want to do that question from Kurt? Sure, first. Yeah. I think you might need to invite a message from our sponsors, Alan. Oh, you're absolutely right. So, before we get to Kurt, at the rest of our questions, let's have a quick word from our sponsor. Investing doesn't have to be complicated. With InvestSmart, you get low-cost, professionally managed ETF portfolios giving you smart diversification without the stress. And right now, InvestSmart is giving new investors a little boost. If you open and fund a new InvestSmart ETF portfolio before December 31, you'll receive a $100 bonus to help kickstart your 2026 goals. Whether you're aiming for long-term growth, retirement, or building wealth for the next generation, there's a portfolio to suit your goals. Head to InvestSmart.com today, you to learn more. Terms and conditions apply. That Kurt says, "It's that time of the year again where I annoy the money cafe hosts with their past predictions." So, I remember they sounded a bit peeved at me last year, but that was all in good fun. Alan and Steven predicted US and Australian stock markets would fall this year. US shares are up about 20% since that inaccurate prediction and Aussie shares are up about 7.4%. So, these bearish predictions were very wrong, which is fortunate for me and others who invest heavily. I can't quite be bothered to pinpoint a prediction from James, but it's safe to say there have been a few bearish ones throughout the year. I appreciate that he owns it though, while sticking to his gun. Many thanks for the podcast, and for reading this, if you do. Now, Kurt, we will cop at Kurt, we'll read out your question. And also, just to point out, James actually predicted the stock market would go up, did you not? No, I predicted it would go sideways. Oh, I see. I said, "No, I have to earn up to that." I thought, "Do you predict?" Alan and I predicted it would go sideways. Steven said 5% up, actually. Thank you. So, well done. That's, you're actually right on the money at the moment for the ASX 200. I do know Alan that Kurt doesn't send in his own predictions, but we'll leave that. That's something for next year's kind of experiments. Do you want me to go through the other ones? Well, yeah. I mean, yeah. So, sorry. I don't know if we have to. Well, I'll know. No, I'll own the prediction that interest rates would stay where they are. Yes. Which I did predict. I said, "I was completely wrong." Steven said they'd end up at 4% at the end of the year, and I said the first cut would be in February, which I think it was. It was exactly in February. Yes. So, well done. Thank you. House prices. I would just like to say. Yes. Interest rates should have stayed where they are. Oh, yes. Probably right. I mean, the Reserve Bank is now talking about what everyone's now talking about rates going up immediately. That tells you that the rates shouldn't have gone down. And the housing prices wouldn't have surged up as much as they had. Well, and inflation wouldn't have gone up. So, that caused the housing bubble by cutting interest rates too much. So, I'm in my defence, you honour, I'm saying, that yes, Governor Cola, that the three rate cuts were a mistake. Oh. And I did say, Alan should be on the RBA rate setting, and I stand by that prediction. Yes. House prices. Alan said down by a few percent. A few. Wrong. Incorrect. Not very specific. Steven stayed out and James said up by 5%. Well done, James. Exactly right. Exactly right. So, what about, you know, prospective though, where, where house prices going now? House prices are going to be up next year. This back as a prediction, I'll be up 9%. I can't see that. I reckon it's more like 7%. Alan? Oh. Five. I mean, it depends if rates go up. If they hike rates in the first half of the year, then, you know, they'll go down. Ooh. That's a conditional prediction. I'm going to say, I'm going to say they'll go down 5% next year because rates will go up. OK. No ifs or no buts. That's what's going to happen. What's your average rate? Where are they going? Confidently wrong, as usual. Interest rates, as I said, they'll be going up. They'll be going up. Inflation's it. Genies out of the bottle. And up, they go. Yeah. Well, I had a graph on the news last night with the heading of which said the Australian economy is going flat out. And I said that Australia, the Australian economy is now a geloppy, geloppy that is in the slow lane because in the slow lane because the engine will overheat if it goes any faster than 30k. Right. So we can't handle growths. So what do you just have an inflation breakout with that? After all that, what is your rate prediction? Yeah. Well, I think there'll probably be one rate hike. I'm going to say rates are on hold for the entire year. There you go. I reckon they're going to take over my direction. I reckon there'll be a bit of jaw-burning. The RBA doesn't want to hike. If it can avoid it, RBA on hold all year. It's very unusual. Listen to have some people not knowing if they're going up or down. I mean, terrible. I don't think it's that old. I think it's OK. People never know. People never know. We were predicting rate cuts a few weeks ago. Totally. That's the unusual bit. Yeah. That's right. That's been a total in three months. Two or three months has been a complete, you know, 180 degrees about face. ASX 200, Stephen. Up another 5%. Ellen? I don't know. I mean, it's mainly about banks and miners in Australia. Banks are expensive. How can I keep going up? I don't know. Miners depends entirely what happens in China and the global economy, you know. China's economy is subsiding. You know, they're doing well in AI and everything, but actually the economy, the domestic economy of China is going down, and especially the property sector. So maybe they'd steal the land, the steel production is the nine ore demand is not going anywhere. I mean, it's possible that both the miners and the banks do nothing next year. And we haven't got enough technology stocks. And anyway, as you say, maybe the technology booms over as well. So look. OK. Sideways. Sideways. I'm going to say the same. SpaceX 200 is flat, but it's up 10% in the first half of the year and then gets back to flat by the end of the year. I think the first half of the year is going to be very, very, the global economy is going to run hot in the first half of the year. I think miners will pull the market up in the first half of the year. OK. Well, we'll be in the first half of the year, June, and the cafe in June, we'll have a turn, it'll be back at me. Love the podcast. Questions on the claims of calls that they have less than a 2.5% profit margin with Woolies claiming similar. Both companies have huge portfolios of real estate, liquor stores, home brand lines, etc. I find it hard to believe they can only return a 2.5% return on average across their business. Is this selective reporting or put it in grocery terms? Are the grocery accounts a loss leader while they make bank on the remainder of their business? Now I guess James, you should probably start with this because you've been in chief to fit through an apologist of a supermarket profit margin. Well, James is all over the subject. This is a fascinating question to me. We're 12 or more months into the debate about other supermarkets price gouging and we're still getting this idea. Claire is suggesting that the supermarkets are hiding profits and manipulating their accounts. Like they've got hollow logs somewhere that they're squirreling the profits away. It's just not happening, Claire. Don't worry. Don't worry. There's no money. The liquor stores make less than the supermarkets. They don't own any real estate. It's all least. The home brand lines, that profit goes through the grocery stores as well. Sales is doing fine, but the profit margins are at a net profit line and not very large. It is a high volume low margin business. Have we got another inquiry into the elbow easy to announce? No, we've got some new laws coming in that specifically target calls and willy, basically, and if they have found guilty of price gouging, which the Adrom C spent 12 months investigating and found no evidence of. And I'm going to defend them as well. The combined value of calls and willies at the moment is 65 billion. And that is only one quarter of the Commonwealth Bank, which is worth 260 billion. So if you really want to talk about people gouging, look at the big banks. There's four of them. There's only two big grocery dropple players and they're not making out like bandits. They're getting flogged by the regulators. They've got. I don't agree that the banks are making out like bandits either. Everything has become a low margin, fairly crappy business too. Yeah, you want to get into AI instead of just having to be big because of the housing market in Australia, which is now worth 11 trillion. 12 trillion. 12 trillion. 12 trillion. 12 trillion. We have. Australia has, you know, one or two players or three or four players in most industries. They do look really big. It doesn't mean that they're good businesses. Yeah, but if you want to get. If retailers ripping people off, I mean, have a look at Bunnings and their profit margins. I mean, West Farmers is worth 92 billion. Have a look at Chemist Warehouse and their category killer. They're worth 33 billion Sigma. They're worth more than calls. So I would argue the retail ripoffs are happening not with the supermarkets. It's happening in the likes of Bunnings and Chemist Warehouse where they are making super profits. Yeah, I'm not sure. So. Okay. So here's a plaintive question from Sam who says my partner, I have 30 years old, working professionals with a good combined gross income of around 250,000, live in Perth, I feel like our ability to buy a home is quickly eroding before us. We began looking in the mid-middle of 2025 and we've seen properties in what we would call less desirable suburbs increase from 750,000 to 1.1 million and even further. We would love to own a home, but now I feel like it's getting away from us. So what are your thoughts on both of these issues, no advance of advice at all of course? So what's he actually asking? We were asking whether he's setting up an investment account with a margin loan. Oh yeah, that's right. He's got a margin loan to try to make up ground in shares. Correct. What do we think of that? What do you think Stephen? Well I, at 250k, I think it's amazing that 250k is not enough to buy a. That's the story. I think we need to change the way we report. I mean, public companies, we report net profit. With people's income, we should report after tax income because our tax rates are so high, our income tax rates are so high, but a couple on 250 are actually on less than 150 because the government's taken about 100 of that and you can't tax a duct on your mortgages, that's the stuff. So you need to be on a massive salary to buy a house in Australia. That's a tragic story. And working, young working people are being hit too hard with massively higher tax rates and the housing market is unaffordable. So it's a really tough story for poor old Sam. And they feel they have to take some pretty big reasonable size risks taking out a margin loan in order just to close the gap to put a roof over their head. And so Sam, on the question of whether we'd like the margin loan idea, the problem with that is that you get caught when the market goes down a lot. And the margin loan lender asks for a top up, you have to top up if the value of your assets goes down and that's the problem. And the trouble is that stocks are high at the moment and people are kind of talking about a crash now. Maybe there won't be a crash. But if there is and stocks fall 30%, then you're going to be in trouble. But Sam, Sam Smart, he's waiting for that 30% correction before he's going to activate the margin loan. So he's got to set up waiting for the crash and that actually is the way to play the margin lending thing. Of course, that's right. Yeah, if you've just got to know your own risk appetite, I think. Two questions from AI around AI here. One is on the idea of a universal basic income. Craig's asking, what are your thoughts on the government removing the age limit to accessing super at preservation age and instead being able to access a drawdown, say 4% at any age once you hit the $2 million cap. So you'd be basically funding your own universal basic income if AI kills all the jobs. And then Keith says, I continually hear from your learner, Gents, that the key to unlocking the potential of the Australian economy is productivity and those productivity gains from come from AI. But if the only people to profit from these gains are a few tech-brows and super funds, the sacrifice is the sacrifice to the rest of us actually worth it. That is a very good question to do. I reckon we need a universal basic humanoid robot and a universal basic AI personal assistant where the government, then I like with Medicare that the government steps in and bulk buys like they do with pharmaceuticals and delivers everyone, robots and AI assistants to help them get through, you know, not having a job because your job's been smashed by AI. Yeah, do you think your robot would come for you when you lose your job? They would pat your head or something like that? I mean, I think everyone should have a robot the way it's going. Alan says it's the biggest thing that's going to happen coming up. And so, you know, but look, whether we get humanoid robots or what, we've got AI. We have, we definitely have AI, right? And it's happening. And the question is, what's the level of unemployment going to be? Nobody really knows that there's a lot of debate. You know, everyone says, oh, well, you know, you look at previous technology booms and other jobs came along. You know, so it won't be, you know, we won't all lose our jobs. Other people say we will all lose our jobs. And nobody actually knows what's going to happen, right? But I think it's fair to say probably that unemployment won't be 4%. No. I mean, but who knows whether it's 10 or 50? I don't know. But the thing is, if it's 50% unemployment, either because of AI that we've already got or humanoid robots that are coming, then they are going to have to do something about keeping people alive. Yeah. So something has to have, whether you, what, what if you call it UBI or whatever, they're going to have to restructure the way welfare and taxation works. Because taxation is based on personal income, personal, you know, labor income. And if half the population isn't earning that anymore, then they're going to have to tax something else. And then they're going to have to redistribute the money properly to people who aren't earning us. Yeah. So it takes capital more than labor going forward. And I reckon that'll have to happen if, if permanent unemployment exceeds 10%. You know, like, so we're all living with permanent unemployment effectively of 4%, right? Because that's what the central banks are saying is full employment, 4% unemployment, right? Well, if unemployment goes to 15% permanently, well, there's something we'll have to be, because that's going to be too much of the current job seeker. Job seeker won't work, right? So they're going to have to restructure, rethink about how those people are supported. So you'd have to rethink almost everything in society. Precisely. That's right. But my question is, who's thinking about that at the moment? Is anyone, is anyone, even considering that? I think people are thinking about it, but nobody in power is actually preparing for it. I mean, you know, if all these companies, I think there's about 20 possibly more companies and plus China building humanoid robots, right? And they're all reckon that they're going to sell tons of them. So if they arise, they're all going to do something, those humanoid robots are going to do something that a human being currently does. That is the thing. So if AI works, lots of people lose their jobs. That's the central equation here. Precisely. I don't know. It hasn't happened yet. Like people are saying it's a jobless boom at the moment. And but there's not mass sacking. There's just not people are not hiring. It's harder for the young, young university graduates. It's actually very tough at the moment. Yeah. But it took, it'll take 40 years for America to be electrified, for example. Now, we're going to look at it in that. We're at the early stages. What's the other question about taking money out of super once you hit two million, should you be able to draw down? Oh, yeah, but you hit two million when you're 80 years old. Yeah. Come on. Yeah. If you're like, yeah, I guess younger people might. But I think, yeah, all I'd say about that question, I think it's from Craig, is they're the sort of things. Everything will be up for grabs if employment really spikes. So maybe, you know, maybe all that gets on goes on. Yeah, unemployment hits 10%. The government's will be unlocking super. Yeah. But to help people survive, there'll be massive political pressure to do that. Well, sure, but yeah, that's right. But the people, the people who are losing their jobs won't be the people with two million dollars in super. Yeah. There'll be people with, you know, three or four hundred thousand in super. And that won't be supporting them. Yeah. Now Stuart says, love the podcast. Apple has announced that a high risk loan that has debt to income ratio above six times and that loans above this six times threshold can only make up to 20% of new bank loans. So if you're a double income family earning a combined 200K, can you be loaned 1.2 million without breaking the threshold? But if you then consider the 5% deposit scheme, then nearly all of these loans will be borrowing 95% of the loan. And we'll be considered a high risk loan by the appry standards. Am I getting that correct or have I missed something? So yeah, these contradictory messages by regulators and governments that Apple is coming in saying, banks, we're going to limit you, you know, you can't, but you know, do more than 20% leverage ratio. Yet the government's going on lent, you know, or even more than 95%. That's fine. It's contradictory. Sure. Yeah, I mean, yes, it's up to, yeah, I don't think there's going to be a real impact from this on lending, but yes, there is a contradictory element here. Everyone's just having to take on so much debt to buy our house. That's right. It's, yeah, it goes back to our earlier question about the 200 and the couple on 250k. So yeah, Stuart's right. There is. And the thing is almost every loan in a way could be considered high risk loan. And the thing is that there's no prospect of house prices coming down to the point where you don't have to take on that much debt, you know, like we may get to a point if they continue, you know, if the policies all work, that house prices don't rise as fast as they have been in the past. And to your point about AI, there's no prospect that wages are suddenly going to explode up to change the debt to income equation. Precisely. But who would you rather be? So we've got 12 trillion in residential property. As a nation, we've got more eggs in the residential investment property market than any other country in the world. Whereas in the US, they're saying that 52% of wealth is in the stock market. And they've never had as big a proportion. So would you rather be America massively overweight the booming stock market bubble where it's 70% of world stock market values? Or would you rather be Australia, housing bubble, 12 trillion dollars in housing and far less exposed to equities? No, I think Australia is exposed to equities. We've all got lots of money in our super. Sure. I don't think so. But not as exposed as the Americans. Like, I mean, we're all exposed to America's share market because we've got 120 billion invested in super funds in AI. But it's diversified, at least. Yeah. Henry says I've been thinking recently about how important a strong opposition is in our government system. This is called Money Cafe. Henry not politics cafe. But anyway, we have for a long time suffered from poor opposition, both in political strength and unwillingness to back good policy and seek bipartisanship. I think we need to increase the respect that comes from being in the opposition, increasing the standards of expected opposition members and poor fellow heads. Yeah, fair enough. I was thinking about this Alan in the context of one of our highlights on the Money Cafe this year, our interview with Jim Charmers before the election. 25,000 downloads, that one. Even the very hint of strong opposition made Charmers come and spend an hour with us, which was absolutely fascinating. I've never heard him talk like that before or since in a public way. With no notes. No notes. Oh, but now what are we getting? We're saying, you know, he knows what the opposition are. He knows the opposition's stuffed. All the momentum of that, that he, all the big ideas that were in that podcast, there's sort of been parked. Henry's exactly right. You know, strong opposition's so important. You can just feel the government has been happy to drift along. Yeah, as they've seen that. Well, the opposition, the liberal party, the national party is imploding. I mean, it's terrible. But Henry's saying that the shadow treasurer should be paid the same as the treasurer. So he's saying, pay them all the same and somehow this will make them more collaborative and we'll get more bipartisanship. I'm not sure that it would. And frankly, if you paid the shadow treasurer the same, you'd be happily, you'd have less incentive to get into government and be a good opposition because you can sit back and blood your way as the shadow and in the same money as the bloke who's got the real talent. You've got to do is think wake up every morning and think about what you're going to say rather than what you're going to do. That's right. So absolutely, government's minister should be paid more than their shadows. Of course. Well, they, they do a bit more work. Certainly do. So now Ben says, I submit to the question a few weeks ago about taxing billionaires more effectively to address inequality. But it wasn't answered. Perhaps too politically sensitive. Now I'm reading John Keyho's Financial Review article. High income tax causes property investors to negatively gear, which argues that Australia's high marginal tax rates, you know, 45% top rate creates strong incentives for negative gearing. And he suggests lowering these tax rates or adopting a Nordic style dual income tax system where investment income is tax separately at a flat rate. An investment losses can't offset wage income. This could reduce property speculation and help housing affordability. Now, John Keyho is your colleague, James. I agree with his argument that our income tax rates are too high and it's distorting and giving everyone a massive incentive to borrow up and negatively gear into property. I think the problem with the top marginal rate that kicks in too early, 180,000 or something. Yeah. So it's just to, you know, you start paying it when you're not making enough money. Yeah. I mean, I think these are all, I think there is something to what Keyho's writing about. And I, you know, this is the problem with this is all wrapped up in this, how much do we tax capital versus labor and how sustainable is it? Yeah. And I think that the less sustainable it gets, the more people try and find ways or that. I certainly think we're going to be taxing capital more in future than we are now. Yeah. Because because labor is getting replaced. And Ben saying, how do you tax billionaires more effectively? Well, I mean, the most obvious one would be the death duties in Herodon's tax, you know, 10%, billionaires, 100 million for the government. Which, which, you know, there's plenty of economists who say we've really missed a trick getting rid of death duties. You guys would know more about this. There's a lot of political pressure in the 70s and 80s. But most countries have some form of death duties. Yeah, yeah. And eventually, we'll probably have to go back there. I think so. Well, we introduced them in 1915 and got rid of them in the 70s. Yeah. Big mistake. Which was a mistake. Yep. For sure. John says, "Dear Stephen, I agree with you regarding Jeff Wilson and Wilson asset management. He's 100% owned funds management company. There is a conflict of interest with being chairman of all the licks as well as reaping a 1% plus management fee from all nine funds each year. I've invested in probably six of the nine over over 400 cane total. And although the funds have generally done well, usually in excess of the benchmarks post fees, I feel we need an independent chairperson for each lick. Against this is the cost of such. Jeff is probably saving their funds, funds money by running all the AGMs on the same day in location. Is there a way we could introduce an AGM resolution to cause a review of management fees triggered, for instance, by two straight years of below benchmark performance? I think that would please most fund holders." Well, I mean, I do remember post GFC Macquarie was under a lot of pressure and at the end of the day, all of their externally managed funds. Macquarie airports, Macquarie infrastructure group, they got pressured into unwinding all of them because there was just hundreds of millions of fees were leaking. So Jeff Wilson's now taking about 70 million a year in fees from the $6.36.4 billion in under management. And the only way to change that is for the board of these licks to negotiate a better management agreement or internalise it. And as long as Jeff Wilson is the chair of all nine boards and is hand picking who comes on and joins him as independent directors, that will never happen. So the stage, the way to reform this is to get Jeff to agree that there's a conflict of interest. You can't be on the board negotiating contracts with yourself and then have independent directors say, "Jeff, you know, you're going to be a billionaire in three or four years if you keep this up. Can we renegotiate because if we cut the fees to 50 basis points, not 110, the share prices and all the licks will go up by five percent straight away." But he's on a Gordon. Everyone loves him for their franking credits and he's getting away with it. There's no, no one's going to make that happen, aren't they? Well, I'm going to run a campaign next year, but it probably might be very effective. Anyway, what do I know? Okay, so I don't know how do I say that. Sir Jack? Sir Jack, I would have said. Sir Jack? Yes. J-A-K. Sir Jack. Let's say that. Jack? Yeah, they're dangers in the knock on effects of building all these data centers. At first, they come from the, they came for the hobbyist via their GPUs and nobody better than I. Then they came for the PC and console buyers via their RAM and the memory suppliers said they would increase production. So up to those, up went those prices too. Next in line, we'll be all consumer electronics relying on silicon. Wouldn't that be inflationary too? And with profit margins squeezed, we'll be looking at a major hit for the customer-focused tech retail economy. More importantly, if Australia tries to chase after data sender money, will that risk hiking our electricity prices as it has in the USA? Or will they be pressed to build their own solar nuclear and light and not to mention the real water usage? Jack GPT may be cheap for us to use more, but the real costs appear to be socialised. I think that's a really important question, because the data centers, including those in Australia, are soaking up a colossal amount of energy, which is why they're talking about putting them in space, so that they collect the sun, you know, directly rather than having it go through the atmosphere. Yeah, there is an inflationary problem. I don't think it's through the cost of silicon or RAM. It's through the cost of electricity. Exactly. We're seeing in areas like Richmond, Virginia, where the US data center sector is based, household electricity prices up 267%. If that happens here, people are going to be saying, "Sorry, why am I paying this again?" So we can get faster cat videos off the internet, or you know, AI can impersonate Alan. I just. No, this is going to be a real issue. I had lunch last week. This is why the government is a little bit hesitant about, you know, the national AI blueprint was total crap. It was so poor. It was such a poor document. It was embarrassing. It was a brochure. It was so poor. It was a poorly written brochure. And that's why, because the government's not sure it wants the knock-on effect of higher electricity prices to be cheated back to it, because that'll be the thing. Sorry, you told us AI was really good, and now my power bill's up 300%. I think it's more because the unions control the Labor Party, and they're worried about the job loss factor. Energy is secondary to the hopeless AI strategy document that they put out. On this subject, I need to tell you about lunch I had last week with a guy who's got a startup in Australia called Space Solar Technologies. That's the company's name. He's trying to get this going. And he wants to start a solar panel's in space thing. And he records it'll be really cheap power. And the way it works is, and this is, apparently, this is true technology. They have these satellites with 2.5 kilometers worth of wide of solar panels. And because the things are above the atmosphere, and they get 24 hours a day sun. It's no, there's no night. So it's all sun all the time, and it's unfiltered through the atmosphere. It's really powerful. They convert the electricity that's created into microwaves. The microwaves get beamed to earth and converted back into electricity on earth. That's the idea. He records it's really cheap. But he can't get anyone to get interested in Australia. But if Google's talking about it, these guys, they're going to have a crack at it, definitely. I'm just, apparently it's cheap and it's going to work. And so they're talking about having the skies full of these solar panels, beaming electricity back to earth. And that's how it's all going to work. Well, if you think about winner of the year, winner of the year Elon Musk is generating 10 billion a year in revenue from Starlink. So he is blaze the trail. He is proving you can do business out of space. And so why not data centers and electricity generation? But as I, as I spoke, as I told you about that, I felt like this bloke is trying to get everyone to listen to an Australia, because you guys, you're I just glazed over as I was talking about, because I lost you, I lost you at the, at the word microwave. Yeah, yeah, you did. Sorry. I'm going to skip ahead a few. We're running out of time a little bit. Douglas says, Douglas from Hobart says, love your show. What will the impact of the baby boomers moving to aged care or passing away be on house prices? Surely we will have a demographic surge coming soon from this generation. Is this the event that will release a tsunami of supply onto the market? Would love to see an Alan Cole or two minute ABC peace on this post. Yes. What are you reckon? Boss. So hang on, the proposition is that as the baby boomers die and move into aged care, move into aged care, increase housing supply, reduce prices. House, house, yeah, okay. Yeah, maybe I suppose. I think immigration levels will be a much bigger factor than that. And the government should do more incentives to get people to, to, to down size. I mean, the downsides are incentive stamp duty holidays. That's such an obvious way to free up housing supply. Yeah, sure. That's right. And they're not doing it. They're not offering anything. There's a disincentive to down size, which is the stamp duty. Yeah, yeah. Good point. Now, Josh says, do you think part of Australia's stubborn inflation comes from an inter-temporal preference shift? Now, that may, I looked it up. This is a chat GPT question from Josh. Inter-temporal preference shift is the, the incentive to do something for a short term fix rather than acting in your long term interest. Oh, right. Inter-temporal. So he then goes on to say, especially for younger Australians who feel they'll never be able to afford assets like housing. So instead, they're spending their money now in this future doesn't matter mindset. So what do we think? Is this driving inflation? Because young people are just spending it while they can? I guess it's an interesting point because the biggest incentive to save is the moment you've got your first mortgage and you suddenly realise, oh my god, I've got to pay this every week. Yeah. Plus when you have kids, of course, and you realise how expensive that is, but I don't know. A young people really spending all their money because they can't afford to buy enough. I think that the question is partly to do with how much cheaper than how much cheaper is rent than mortgage repayments. Because rent's pretty high, you know, I mean, I think it is, I think rent is a bit cheaper. So you have got a bit more money to spend, but not that much more. You're certainly not, you know, you're certainly not flying business class to Europe. I was trying to think of another inter-temporal preference shift and I think maybe the ASX has been refusing to invest in their long-term infrastructure and take a long-term view. Yes. And instead, they've just been paying out 90% of profits in dividends. That's the inter-temporal preference of most companies, isn't it? Well, that's right. And the great Australian story with ranking credits is just pay out the cash and don't invest in business unless it's started soon. Yeah. Yeah. No, we've probably got to finish up with hands. Hands has got the question of the day, dear team, with a special mention to Greg, we, this is collectively on behalf of all money cafe listeners, we apologise to Greg for mistaking his very real voice for AI. Thanks again for all your work. Now, this is the thing about Greg. He's got the best voice of everyone on this podcast. He certainly does. We only get to hear the message from the sponsor. Yeah. And Greg is real. He's a legend. He's the best journalist in the world or I know. Yes. All things tech, subbing, producing, sourcing all your interview talent. He knows exactly what a machine. We can't, we can't thank you enough Greg for all the work you need to make us look good. And he's come up with these trophies, which is for those who can't see it, they are microphones made of what seems to be bronze, bronze, pure bronze microphones on top of a little stand that says Alan Kohler, the money cafe best host. Yeah. And well, we're the equal best co-hosts. We're with tough fields for all of those awards too. That's a lot of challenges. I do, I do. Greg has put this on expenses. Yeah, me too, me too. Because Greg is saying he probably hasn't, because you know, this is the sixth time we've had a three-hand in person. So we've had four-year enders. We've had the gym charmer's grilling for an hour and we celebrated our million downloads. We had a catch up when we had a million downloads. And Greg tells me we're now at 3.44 million downloads over the life of the money cafe. Isn't that great. And Greg puts it together for us every week. Where'd he go? Can't thank you enough mate. We'll, we'll be challenging the rest of history before now. Yes. Yes. We are growing. 20% of the year. We're doing well. 20%. Well, thanks everyone for listening to the money cafe today and all year. We've really enjoyed bringing it to you. And we'll be taking a break over the summer. We'll return on Wednesday, the 28th of January, 2026. So if you've got a question for then, please email it to the money cafe at urecareport.com.au. We're all looking forward to 2026. I must say it's going to be a really interesting year. Totally. It's a full of inaccurate predictions. It's going to be great. I mean, think of what 2025 brought us. It could be even, even crazier next year. Well, I've just been reading a book that was published in September about super intelligent AI. Right. The title of the book is if anyone builds it, everyone dies. And I've just been, I mean, I feel like it wouldn't be dead for quids with what's going on. It's so interesting. Well, you've got to look after your robot soon. So, well, yeah. And Alan, we should thank the fantastic audience. It's come down to see us today. Oh, amazing. Can we get them to give them like a clap or something? Yeah, thanks for coming, everyone. Oh, thank you. We have taken over the cafe. Yeah. Stay safe, everyone. Have a great Christmas and New Year and we'll see you in 2026 till then. I'm Alan Kohler, founder of urecareport and finance presenter and columnist for the ABC. I'm Stephen Maine. And I'm James Thompson, senior Shanta Clear columnist at the Australian Financial Review. See you next year. Bye-bye.