 It's all about the Aussie dollar and of course the RBA. In less than 30 minutes we will get that all-important RBA case rate decision. We are going to take you live now to Carsten Scott, who's outside RBA headquarters. He's joined by Mark Bailey from FIG Securities over to you, Carsten. Leigh Ann, thank you so much. Welcome to a wet, not so windy but very wet Reserve Bank forecourt. Mark Bailey from Equasio, welcome to you. Lots of push-pull factors, just that trade surplus story that's a better than expected one, goes some way to data offsetting what was a disappointment on the retail sales front, even annualized 2. something percent off. So not looking rosy there, but it's all about macro pru, is it not, by the Reserve Bank and perhaps some commentary on that today. Yeah, I think you'd be looking for some commentary on the on the macro potential regulations. Also, don't let's not forget as well the financial stability review comes in next Thursday as well. So you probably see a bit of commentary around that as well, but it's going to be interesting to see and I think they're going to have to sit on their hands to wait and see what actually happens, what the impacts are of this macro potential. Obviously focusing very much on the interest only part, reducing that to 30% of the books and they historically over the last 12 to 18 months that's been running around about 40 to 42%. So there's going to be a bit of an impact there. Let's face it, they had a choice just a week or so ago when they made that announcement as to whether they would have further clamped down on the investor loan book part of the market now. Shane Oliver from Manpe Capital Investors saying today, it should have been a 5% threshold. 10% let them off with a smile and some. Is it too little, too late? Has the horse bolted with these prices now at such elevated levels? It's quite difficult to get it back and again, I think macro potential is the right way. We were talking about it last month when we sat in the same place. I think that's the right way to do it. It's still a fairly blunt tool and then will they go down to postcode specific? Because you've got home builders in Western Australia complaining about the macro potential tools. 4,000 home builders are saying this is really the most unwelcome reviews. Exactly. So do you actually get into the actual specifics of postcode very similar to New Zealand where you were targeting specific markets and I think potentially that is going to be down the line. I think the RBA is going to be pretty reluctant to do that though. It's interesting because the Treasurer has shown a willingness to be selective when it comes to tax reform with that $50 million cap essentially for small business to try to foster that. But equally on the other side of the divide, people are saying it's distorted the market. It'll create a disincentive to grow above that level. So if they can do it on the fiscal footing, is it a bar to say macro does the same way that the monetary policy does the same sort of a selective ring fencing? Look, I think you can do it. And you've seen the Reserve Bank of New Zealand do exactly the same. So there are blueprints. I think the regulatory authorities here, whether that's APRA, ASIC and the RBA together will be probably reluctant to go down that path. They've historically been reluctant to use macro potentials. So it's kind of a slow course down that trajectory. But I think the Australian market is so different in different regional centres and different regional capitals that you have to do that. Go global. Let's look at the 10-year in the U.S. and let's wonder to ourselves the cost of funding for the big four out of cycle moves. Now look at a when, not if scenario moving forward. How does that story in terms of the Fed and pricing by bond markets there sway now our big four in the next six months? Look, I mean, bizarrely, the actual 10-year U.S. Treasury has actually rallied. The yields come down. So it's actually pretty close to the bottom end of the $232.63 range. So what about funding costs look a little bit sort of anachronistic to call that one up? Yeah, look, I'm not sure that they have increased significantly over the last six months. But you are going to continue to see the out of cycle because you're continuing to see net interest margin compression. And you've got to remember it's the overall cost of the book, not just the marginal cost that they're putting on. So some of the longer-dated stuff maybe was done at better financing rates. But I think potentially overall you are seeing slight increases in cost of funding. I mean, seven bips and some as they creep higher ain't going to essentially bring the RBA out of hibernation to cut though, are they? No, no. But an offset? No, I don't think so not yet. And I think obviously the key one is on the homeowner variable. And that's a key one that they will probably look at. But if it continues, it will certainly skew the RBA towards more cutting. The argument in Phil Lowe referred to this one of his first speeches for this year as governor saying, look, we do have tools to paraphrase, put foam on the runway, allow a Tim Geithner style response after things burst. But when you can see that the rate of house price appreciation in the key capital city markets, Sydney and Melbourne, is such that there is a lot now more of a pain factor to factor in where we to fall. In other words, these falls could be felt as being more precipitous than had otherwise been the case if we hadn't run up to this extent. Yeah, look, I mean, house pricing in Australia has always been a puzzle to me. You know, I came to Australia 10 years ago and, you know, started renting and, you know, couldn't accept that the house prices are where they are, but they are. And they've gone up probably, you know, 20, 30 percent in the last three or four years. So they're continuing to run away. They're continuing to see demand. And, you know, as an offshore investor, like whether you're a US hedge fund, you just don't understand the dynamics in the market. You know, you think it's a big country. There's plenty of land to build on. But, you know, house prices have got away. And it's a case of how do you prick that bubble without causing it to completely blow up? What about a Vancouver style tax on foreign investments to the tune of about 15 percent? That did certainly pull back price action in that market. To your point, though, you don't want to crash. You want to measure orderly decline, move back from here. Would that be another tool option? Look, it's obviously a tool option. I think the Chinese investor is a bit of a furby. Not just Chinese, but just an offshore investor's pursuit. Yeah, but generally offshore investors. I don't think they're one of the key determinants. Maybe the margin and maybe that's what's driving the price is. But I think it's just the demand for housing from locals. You know, whether they, you know, like myself, who's got an Australian passport recently, you know, am I more entitled to buy than somebody else? You know, and that's the debate. And I think that, you know, house prices, I agree, have run up rather rapidly and probably too fast too quickly. Stories of people collapsing at auctions, you know, out of the sheer will and frustration that mounts as that needle moves ever higher. I mean, quite a startling live scenario, is it not? You know, you would collapse from all that activity. It is. But you know, people have been through that, you know, the Saturday mornings that you kind of waste seeing houses, going to auctions, everything else, testing the market. You know, it is quite emotionally draining and physically draining as well. So, yeah, I can understand that that kind of collapsing. But you know, the end of the day, house prices are continuing to increase. We're not seeing any pullback. We had some strong house price data again this week and last week. So, you know, that is a key concern for the RBA. And that's what you see in the macro potentials trying to prevent further house price increases. We've got the buzz, finally, the buzz of construction around us here and out of place. And under the canopy there of the latest to rise from the ashes proposition, you've got commerce going on. The problem is it's free. Let's talk to the services economy. These are not homeless people admittedly. I'm not sure whether you can even pan around to showcase what is now a fairly established part of modern place. On that measure, does that some kind of a metaphor for the shift from a mining boom to a services flop to that degree? I mean, there's no pricing power even on display here. They're giving it away. Yeah, look, I think it's a fairly long bow to draw. But I understand kind of where you're coming from. Whoa! Okay, that's right. And in terms of, you know, the service economy and, you know, but I think it highlights the fact that a lot of businesses are still doing it tough and are still, you know, not finding it easy. I think if you go anywhere around, you know, Australia, nobody's really knocking the ball out of the park. And I think that's part of the problem that the RBA is seeing that, you know, the retail sales, you know, highlighted that it's still tough in the real economy and you're not seeing the jobs growth part-time versus full-time. No wage growth. So it's a pretty, you know, tepid back job. And you say they will cut not today, but just your prediction finally, when might it be Melbourne Cup Day November? Yeah, potential, maybe even a bit before, maybe August. But I think, you know, that the Australian economy will demonstrate that it's still on weak ground and on a weak footing. And that, you know, the next move is further cuts. And I know that's not consensus, but, you know, and the RBA is continuing to talk very positively last half-full. So, you know, we'll probably need some pretty weak inflation data to trigger that. Watch this space. Thank you so much for the setup to today's show. Appreciate it. There she goes again. We'll get some sandbags at the ready in the event, as we might have predicted. The wind and the rain, but a little bit of our sun peeks its way through those clouds. And