Latest / What the Flux / RBA's pause for concern | Woolworths slashes prices | OpenAI's biggest capital raise... ever

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RBA's pause for concern | Woolworths slashes prices | OpenAI's biggest capital raise... ever · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brettan, I'm justin and it's Wednesday, the second of April.
• 0:09
  Speaker 1: Chusey boy, it's officially by by to Vintage Sellers and
• 0:13
  Speaker 1: first Choice liquor or as calls like to say they've
• 0:15
  Speaker 1: gone into retirement from April. They'll all co by some
• 0:18
  Speaker 1: version of Liquor Land, which supposedly has much better brand
• 0:21
  Speaker 1: awareness than the others. Seems like all liquor stores still
• 0:25
  Speaker 1: battling against the all mighty Dan Daniel, Dan the Man Murphy,
• 0:30
  Speaker 1: very true.
• 0:31
  Speaker 2: Man buck mamma. We saw the Reserve Bank make a
• 0:33
  Speaker 2: big call yesterday on the cash rate and we have
• 0:36
  Speaker 2: it all covered in the Flux App, including a deep
• 0:39
  Speaker 2: dive into what a thirty six straight mortgage might look like.
• 0:42
  Speaker 2: So if you're interested in what that is and how
• 0:44
  Speaker 2: potentially could come to Australia and make sure to check
• 0:46
  Speaker 2: it out in the Flux app.
• 0:47
  Speaker 1: Three truly inspiring stories today, Jessey boy, Let's do it
• 0:51
  Speaker 1: for our first. The Reserve Bank of Australia has paused
• 0:55
  Speaker 1: the cash rate at four point one percent because it
• 0:58
  Speaker 1: doesn't want to make any big moves before Donald J.
• 1:01
  Speaker 1: Trump's tariffs.
• 1:02
  Speaker 2: The RBA are certainly a cautious lot b man, so
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  Speaker 2: this isn't that surprising, tell me all.
• 1:06
  Speaker 1: Well, juzzy boy. The RBA is obviously Australia Central Bank,
• 1:10
  Speaker 1: which sets the cash rate.
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  Speaker 2: That's the interest rate that thanks lend to each other
• 1:13
  Speaker 2: for borrowing.
• 1:14
  Speaker 1: So when the RBA's cash rate goes up, the interest
• 1:16
  Speaker 1: rate on your home loan typically goes up, and when
• 1:18
  Speaker 1: the cash.
• 1:19
  Speaker 2: Rate goes down, the interest rate typically goes down.
• 1:21
  Speaker 1: Now, in feb the RBA cut the cash rate by
• 1:24
  Speaker 1: zero point two five percent, down to four point one percent.
• 1:27
  Speaker 2: And homeowners were shook us in a good way because
• 1:29
  Speaker 2: the first cash rate cut they'd enjoyed since November twenty twenty.
• 1:33
  Speaker 1: And now, Juzzy boy, the RBA crew have met once
• 1:36
  Speaker 1: more with some new members and made their big call
• 1:38
  Speaker 1: for April.
• 1:38
  Speaker 2: And despite the date being April Fool's Day, the RBA
• 1:41
  Speaker 2: were not clowning around.
• 1:42
  Speaker 1: I can confirm there were no stand up routines or
• 1:45
  Speaker 1: whoopy cushions on the chairs.
• 1:47
  Speaker 2: And no, we've dropped rates to zero percent. Just kidding, nah.
• 1:51
  Speaker 1: They decided to sternly and seriously pause the cash rate
• 1:55
  Speaker 1: at four point one percent.
• 1:56
  Speaker 2: The main reason they wanted to wait until Donald Trump's
• 1:59
  Speaker 2: global tariffs are in iplemented before making any big decision.
• 2:02
  Speaker 1: Yep, Trump's tariffs are supposed to come into effect.
• 2:05
  Speaker 2: Today, or, as he calls it, Liberation Day.
• 2:07
  Speaker 1: The biggest fear for many economists is that these huge
• 2:10
  Speaker 1: tariffs could lead to global stagflation.
• 2:14
  Speaker 2: So what is the key learning here?
• 2:15
  Speaker 1: Stagflation is when a country suffers from stagnant economic growth
• 2:19
  Speaker 1: and high inflation at the very same time.
• 2:21
  Speaker 2: It's called the terrible two yes ce juz boy.
• 2:23
  Speaker 1: When wages aren't rising and jobs are not booming, you'd
• 2:26
  Speaker 1: expect economic growth to slow down.
• 2:28
  Speaker 2: Because when the economy isn't doing well, people and businesses
• 2:31
  Speaker 2: tend to spend less.
• 2:33
  Speaker 1: But during stagflation, prices keep rising despite a slow economy.
• 2:37
  Speaker 2: The man Right now, global markets are spooked by the
• 2:40
  Speaker 2: potential impact of Trump's tariffs.
• 2:42
  Speaker 1: And investors fear that Trump's tariffs will make that nightmare real.
• 2:46
  Speaker 2: And then, man, we've already seen the caution in the
• 2:47
  Speaker 2: share market, with the NAZDAK one hundred down more than
• 2:50
  Speaker 2: eight percent so far.
• 2:51
  Speaker 1: This year, and even the ASX two hundred has been
• 2:53
  Speaker 1: down nearly three and a half percent this year so far.
• 2:56
  Speaker 2: So the man holding rate steady gives the RBA more
• 2:58
  Speaker 2: time to see how this plays.
• 2:59
  Speaker 1: Out, especially with a wildcard like the US in the mix.
• 3:03
  Speaker 2: For our second story, Woolies has slashed the price on
• 3:06
  Speaker 2: its groceries last month to close the gap on AUDI
• 3:09
  Speaker 2: and deflect atension from AAAK and the election campaign.
• 3:12
  Speaker 1: Nothing to legislate here, folks. Just a community serving, small
• 3:15
  Speaker 1: supermarket chain is what we are. What is going on here?
• 3:17
  Speaker 2: Okay? So we know that Woolies is Australia's largest supermarket
• 3:20
  Speaker 2: chain with nearly thirty seven percent of the grocery market.
• 3:23
  Speaker 1: And jusiboy, there's a Woolwortz or a Woolies Metro on
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  Speaker 1: almost every single corner of this great land.
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  Speaker 2: In fact, be Man Woolarts has over eleven hundred stores
• 3:31
  Speaker 2: across Australia. That is more than there are makers.
• 3:34
  Speaker 1: And while Woolies has been steadily increasing their grocery prices
• 3:38
  Speaker 1: over the last year or so, March was a totally
• 3:40
  Speaker 1: different story.
• 3:40
  Speaker 2: Yeah, Woolies cut their prices in March significantly. According to
• 3:44
  Speaker 2: JP Morgan.
• 3:44
  Speaker 1: The goal has been to bring the grocery price gap
• 3:47
  Speaker 1: with AUDI to its lowest point in two years.
• 3:50
  Speaker 2: Be Man Let's be honest, the timing is suspiciously convenient.
• 3:54
  Speaker 1: Yeah, Both Woolies and Coals are under pressure from the
• 3:56
  Speaker 1: AH Triple c's ongoing investigation as well.
• 3:59
  Speaker 2: As polics being in full crackdown on greedy corporate's mood
• 4:02
  Speaker 2: ahead of the election.
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  Speaker 1: In particular, Woolies and colls have heard threats about legislating
• 4:07
  Speaker 1: against price gouging in supermarkets.
• 4:09
  Speaker 2: So what is the key learning here?
• 4:11
  Speaker 1: Supermarkets know the biggest threat to their empires isn't cheaper
• 4:14
  Speaker 1: toilet paper, it's tighter regulation.
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  Speaker 2: And right now, be man, Woolies and coals biggest fear
• 4:19
  Speaker 2: is legislation that will stop them from growing market share
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  Speaker 2: and growing profit margin.
• 4:23
  Speaker 1: There are already laws banning price fixing between supermarkets, there
• 4:27
  Speaker 1: are laws to ban predatory pricing that wipes out smaller competitors,
• 4:30
  Speaker 1: and there are also laws to stop misleading price signage.
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  Speaker 2: But there's no laws stopping a supermarket from just jacking
• 4:36
  Speaker 2: out prices to make more profit.
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  Speaker 1: That's what the government is calling price gouging. So juzzy boy,
• 4:40
  Speaker 1: it's no surprise that as these threats come in, Woolies
• 4:43
  Speaker 1: and Coals are dropping prices.
• 4:45
  Speaker 2: Yeah, they're now only seven point eight percent and eight
• 4:47
  Speaker 2: point five percent more expensive than Audi, respectively.
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  Speaker 1: Down down from eleven percent plus just last year. That's
• 4:54
  Speaker 1: according to JP Morgan.
• 4:56
  Speaker 2: So now it's all about the optics for the supermarkets,
• 4:58
  Speaker 2: keeping things look in friendly fair.
• 5:00
  Speaker 1: For our third and final story, open ai has announced
• 5:04
  Speaker 1: that it's closed the largest round of capital ever raised
• 5:08
  Speaker 1: by a private company, pocketing a tasty forty billion US dollars.
• 5:12
  Speaker 2: Wow, they've raised more than the whole value of Telstra
• 5:14
  Speaker 2: in just one afternoon, b Man, so tell me more well.
• 5:17
  Speaker 1: Open Ai launched in twenty fifteen as a nonprofit research
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  Speaker 1: lab that focused on exploring AI and ensuring it benefited
• 5:24
  Speaker 1: all of humanity.
• 5:25
  Speaker 2: In twenty twenty two, b Man open Ai launched its
• 5:27
  Speaker 2: now famous chatbot, chatchapt, which revolutionized how everyone did things
• 5:32
  Speaker 2: like applying for jobs, like getting travel tips, like writing
• 5:36
  Speaker 2: university essays. In fact, be Man chatchpt became the fastest
• 5:39
  Speaker 2: growing consumer app ever, hitting one hundred million users in
• 5:43
  Speaker 2: just two months.
• 5:44
  Speaker 1: And now chatchpt has more than five hundred million weekly
• 5:47
  Speaker 1: users and open ai has become a household name.
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  Speaker 2: So now open AI's raised forty billion US dollars, which
• 5:54
  Speaker 2: values the company at three hundred billion US dollars.
• 5:57
  Speaker 1: And Jullie Boyd. This has become the largest ever round
• 5:59
  Speaker 1: of capital raised, more than triple the previous record.
• 6:02
  Speaker 2: But be Man. Because of the unique structure of open
• 6:04
  Speaker 2: ai as part four profit and part nonprofit, the shares
• 6:08
  Speaker 2: are expected to be issued as convertible notes.
• 6:11
  Speaker 1: So what's okay learning here?
• 6:12
  Speaker 2: A convertible note is essentially a load that can be
• 6:14
  Speaker 2: converted into shares of the company at a later date.
• 6:17
  Speaker 1: There are specific events that cause the convertible note to
• 6:20
  Speaker 1: convert into equity. In this case, the condition is when
• 6:23
  Speaker 1: open ai converts into a four profit structure, which must
• 6:27
  Speaker 1: happen by the end of twenty twenty five.
• 6:28
  Speaker 2: In fact, be Man, open Ai will only receive ten
• 6:31
  Speaker 2: billion US dollars.
• 6:32
  Speaker 1: Up front, and if they're unable to convert to a
• 6:34
  Speaker 1: for profit structure, this forty bill may end up being
• 6:38
  Speaker 1: just twenty bill.
• 6:39
  Speaker 2: Just twenty bill. Flexam, have you ever heard about the
• 6:41
  Speaker 2: thirty year fixed strate mortgage? It is very hot in
• 6:44
  Speaker 2: the US, but it doesn't exist in Australia yet. We
• 6:47
  Speaker 2: break it down in the flux app what it is,
• 6:49
  Speaker 2: how it's used, and why it might be useful to
• 6:51
  Speaker 2: have in Australia as well. To make sure to download
• 6:53
  Speaker 2: the Flux app to check it out.
• 6:54
  Speaker 1: Thanks for listening and we'll see you on Friday.