Share
NAB Morning Call
Weekend Edition: Bank Hybrids. Just too complex?
Season 9, Ep. 59
•
Friday 21st March 2025
Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.
APRA plans to phase out bank hybrids (AT1s) by January 2027. So, what exactly are AT1s and why is the regulator so concerned? In short, they are CoCos, contingent convertibles that transfer to equities when a bank capital’s capital falls below a tipping point. But do mum and dad investors understand the complexity of the offering and do the instruments adequately provide for their intended purpose? That’s APRA’s big concern, pointing to the Credit Suisse example where AT1 investors lost a lot of money.
Chris Joye from Coolabah Capital has been critical of the APRA decision. While initially he thought AT1s were too complex an instrument and there was an elegant simplicity in choosing between stocks and bonds, his position has changed. He now worries that some of the mum and dad investors could be driven to even riskier assets.
Chris is not one to hold back his opinions, which you’ll hear this week, but he also does a great job of explaining how this asset class works. Something you won’t be able to buy after next year.
More episodes
View all episodes
132. Fed all agree to hold, but mixed view on dots as outlook weakens
15:37||Season 9, Ep. 132Thursday 19th June 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe Fed agree unanimously to keep rates on hold, but the expectation of two cuts this year was enough for shares to rise a little today before finishing flat, no doubt driven down by geopolitical uncertainty and more weak data. NAB’s Tapas Strickland says the one central bank that did surprise was the Riksbank. A cut was priced in, and was delivered, but the market was surprised at the prosect of another cut.Tapas also talks about the perceived challenges to the US dollar as the global reserve, with the PBoC Head talking about a new world currency order, where no one currency dominates. The main number today is the Australian employment read, and three central banks meet, including the Bank of England. Everyone today though will be keeping one eye focused on the news - will the US be drawn into the Iraq-Iran war?130. More signs of US slowdown, as Middle East tensions escalate
14:12||Season 9, Ep. 130Wednesday 18th June 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABMarkets are squeamish today as fears mount that the US will become more involved in the war between Israel and Iran. Certainly, the optimism that the whole affair will be over in a hurry has diminished, with the US dollar higher, oil much higher and equities taking a hit.NAB’s Sally Auld says markets are unnerved by the President’s comments as parts of the US military complex converge on the Middle East. There’s also some discussion on further weak economic data from the US a day out from the Fed meeting and it’s revised dots plot.129. Underpricing war? Pulling out of the dollar.
16:52||Season 9, Ep. 129Tuesday 17th June 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABMarkets seem optimistic that a resolution between Israel and Iran will be found. NAB’s Rodrigo Catril says there’s a general feeling that Iran has its back against the wall and is trying to communicate that they want to d e-escalate the situation. Despite today’s market reaction, there doesn’t seem any evidence of a slowdown in the hostilities. Meanwhile, a Bank of America note overnight suggests central banks have been pulling out of the US dollar since March. Rodrigo also talks through the latest activity data from China, looks ahead to US retail sales today and prepares us for a week that could see a lot of movement in the US Big Beautiful Bill.128. Oil prices rise, gold hits new high, as Middle East war escalates
14:28||Season 9, Ep. 128Monday 16th June 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABSince Israel fired bombs into Iran on Friday there has been bombardment on both sides. NAB’s Ray Attrill talks about how the US dollar has resumed its safe haven status, with the Aussie losing ground as risk-off sentiment rises. Phil asks whether this pattern could worsen as the war seems set for more escalation rather than a rapid resolution. It will be the focus of the G7 summit over the next few days, perhaps pushing tariff talks down the order of things, even though Trump’s individual offers are set to be dished out within the next week. Six major central banks meet this week, including the Fed, with the revision of dot-plots getting the most attention.127. Weekend Edition: Back from the brink. How to save a business in distress.
29:17||Season 9, Ep. 127Friday 13th June 2025Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.Data from CreditorWatch shows that almost one in ten hospitality businesses in Australia shut down in the 12 months to April. Whilst the growth in insolvencies has levelled off this year, it doesn’t mean the worst is over. Michael Fingland, CEO of Brisbane-based turnaround specialists Vantage Performance, fears that the cost of living is starting to bite for businesses reliant on discretionary spend. So, what should companies be doing when income is falling and costs are rising? Michael offers some sage advice and explains how turnaround specialists tackle the issue - even for companies that are trading insolvent.126. Dollar not so mighty, job claims rising, Trump has envelopes ready.
16:29||Season 9, Ep. 126Friday 13th June 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABProducer prices in the US, just like CPI, seem to have had very little impact from tariffs so far. But jobless claims are rising. NAB’s ray Attrill says the continuing claims are similar to recession levels. All the more reason for the Fed to cut rates - but not the 2% that President Trump is now looking for. Meanwhile the President has reminded everyone that he is serious about tariffs, with envelopes ready to send to trading partners with their own bespoke tariff. That helped push the US dollar down to a two-year low. Trade and tariffs will undoubtedly be talked about at the G7 summit that kicks off this weekend in Alberta, Canada.125. No big deal, but softer US CPI.
14:15||Season 9, Ep. 125Thursday 12th June 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABTwo big bits of news overnight, First, a trade deal has been reached between the US and China, that secures supplies of China’s rare earths for the US, and allows China to import goods that had previously been blocked. But, as NAB’s Sally Auld says, it really is a statement on what was talked about in Geneva, and tariffs remain in place, at 55% on China’s exports. No surprise then, that equity markets are far from excited about it. More significant was the softer US CPI print in May. The impacts of tariffs are not making a big stamp on prices, yet, but again the market response was restrained, because its still too early to tell. PPI numbers later today might tell a different story.124. All quiet on tariff talks, but UK surprises with soft jobs data
15:37||Season 9, Ep. 124Wednesday 11th June 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe UK has grabbed a bit of the focus overnight. All eyes are on the US-China trade talks in London. Equities have been helped by the positive sentiment coming from US trade secretary Howard Lutnick, although NAB’s Rodrigo Catril wonders whether the US Commerce Secretary has a tendency to talk things up. Some of the biggest market moves though, relate to the UK’s employment detail was softer than expected, with a sharp rise in unemployment claims. Phil and Rodrigo also talk about the NAB Business Survey yesterday and look ahead to US CPI today.123. All eyes on US China talks. Trump wants rocket fuel from the Fed.
16:08||Season 9, Ep. 123Tuesday 10th June 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABMarkets had been preparing for a softer jobs print in the US on Friday. NAB’s Taylor Nugent joins Phil to talk about a result that was better than expected, but there are still plenty of signs of weakness. Perhaps not enough, though, to support President Trump’s call for a one percent rate cut to add rocket fuel to the economy. Today the focus is on trade talks between the US and China in London. It comes as data over the weekend shows just how much trade form China to the US fell last month. Locally, focus with be on the NAB business survey and Westpac consumer confidence numbers, and later this week US CPI is the number to watch.