Latest / What the Flux / The RBA's cash rate call | NBN Co's billion dollar loss | JB Hi-Fi's big payout

Transcript

The RBA's cash rate call | NBN Co's billion dollar loss | JB Hi-Fi's big payout · What the Flux

• 0:05
  Speaker 1: This is what the Flux. I'm Brett and I'm Justin
• 0:07
  Speaker 1: and it's Wednesday, the thirteenth of August.
• 0:09
  Speaker 2: Suzy Boy. In the most recent quarter, Australian's watched much
• 0:12
  Speaker 2: more sport and Netflix's market share shrunk to just eight
• 0:15
  Speaker 2: and a half percent. That's according to Ostan, But take
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  Speaker 2: it with the grain of salt because it only gathers
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  Speaker 2: data from TV set, both the connected type and the
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  Speaker 2: old school. That means it doesn't track content watch on computers,
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  Speaker 2: tablets and mobiles. So this obviously skews towards old school TV.
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  Speaker 2: And you can bet your bottom dollar that the traditional
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  Speaker 2: TV networks will be using these stats.
• 0:33
  Speaker 1: Whatever suits their story better be man. I am pretty
• 0:36
  Speaker 1: excited today. The RBA made a big decision yesterday. We'll
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  Speaker 1: be talking about it in the pod. But if you
• 0:41
  Speaker 1: want to learn more about inflation measures CPI, there's trimmed
• 0:44
  Speaker 1: Bean and sound like the smartest person in the room.
• 0:47
  Speaker 1: We have it all covered in the Flux apps. Make
• 0:49
  Speaker 1: sure to check it out.
• 0:50
  Speaker 2: Three entertaining stories today, Juzzy Boy, let's do it for
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  Speaker 2: our first. The RBA has cut the cash rate yzero
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  Speaker 2: point two five percent to its lowest level in more
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  Speaker 2: than two.
• 1:00
  Speaker 1: Next minute, share market smashes through its record. So tell
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  Speaker 1: me we'll be man, so juse boyd.
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  Speaker 2: The RBA is essentially the admin of Australia's economy group Chat.
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  Speaker 1: Yeah, the board member said, eight times a year to
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  Speaker 1: check in on Australia's economy, it's unemployment rate as well
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  Speaker 1: as its inflation.
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  Speaker 2: And of course make a call on the cash rate.
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  Speaker 1: And last month, when the financial markets predicted a ninety
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  Speaker 1: five per cent chance of a cash rate cut, the
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  Speaker 1: RBA surprise us all.
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  Speaker 2: With a pause. This month, they've cut the cash rate
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  Speaker 2: by point to five percent, which means the cash rate
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  Speaker 2: is now sitting at three point six percent and it's
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  Speaker 2: got the share market very excited, especially because the RBA Governor,
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  Speaker 2: Michelle Bullock hinted of more cash rate cuts to come
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  Speaker 2: this year. But the man, before we all start partying,
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  Speaker 2: there's also a bit of a mood Kuller in her
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  Speaker 2: post cash rate cut commentary.
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  Speaker 1: What was that productivity? Yeah?
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  Speaker 2: What about it?
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  Speaker 1: Well, the RBA now reckons that productivity in Australia will
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  Speaker 1: grow at just zero point seven percent a year, which
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  Speaker 1: is down from its previous assumption of one percent annual
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  Speaker 1: growth of productivity. So what is the key learning here?
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  Speaker 2: Productivity growth measures how efficiently an economy can produce goods
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  Speaker 2: and services over time and.
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  Speaker 1: B Man productivity is essential for an economy because it's
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  Speaker 1: the main driver of rising living standards. That's because it
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  Speaker 1: allows wages and incomes to grow without adding inflation. Higher
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  Speaker 1: productivity means each worker can produce more in the same
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  Speaker 1: amount of time because of better skills or improved technology
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  Speaker 1: to work with. On the other hand, when you have
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  Speaker 1: a weak productivity, it means the economy's potential output is lower.
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  Speaker 1: And while the RBA is downgrade from one percent two
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  Speaker 1: point seven percent growth might sound small, this compounds over
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  Speaker 1: time and it can make a very big difference.
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  Speaker 2: So unless Australia can fix its productivity problem, it may
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  Speaker 2: mean a few things. Light its lower wage growth, fewer
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  Speaker 2: job opportunity, and an economy.
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  Speaker 1: That feels like it's crawling.
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  Speaker 2: For our second story, NBNC has cut its losses to
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  Speaker 2: under one billion dollars in the last financial year as
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  Speaker 2: it spends big on upgrades to keep up with competition.
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  Speaker 1: Love that the nbn CODs turned a one billion dollar
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  Speaker 1: loss into a win.
• 2:51
  Speaker 2: Tell me more so. The NBN aka the National Broadband Network,
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  Speaker 2: kicked off in two thousand and nine with a big
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  Speaker 2: promise of lightning fast internet for all.
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  Speaker 1: Sixteen years later, Australia is sitting at a global speed
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  Speaker 1: ranking for fixed broadband of seventy five.
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  Speaker 2: Yes, we are behind renowned internet powerhouses like Trinidad and Tobago, Guyana,
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  Speaker 2: Nicoagua and of course.
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  Speaker 1: Granada now Biman NBNCo has announced that it has cut
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  Speaker 1: its annual loss by ten percent in the last financial
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  Speaker 1: year to just nine hundred and sixty three million dollars
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  Speaker 1: the jazz boy before you give NBN a standing ovation.
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  Speaker 1: They also received one point one nine billion dollars from
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  Speaker 1: the federal government, which is fifty four percent more than
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  Speaker 1: twenty twenty four and NBN is spending big on new
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  Speaker 1: low Earth orbit satellite broadband via Amazon that Begman. The
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  Speaker 1: reason is because NBN is facing serious competition from other
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  Speaker 1: fixed broadband providers with faster connection.
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  Speaker 2: SINC five G and satellite broadband.
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  Speaker 1: So what is the key learning here?
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  Speaker 2: When it comes to business, there are generally five forces
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  Speaker 2: of competition that can influence a business's profit potential.
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  Speaker 1: There's the threat of new entrants.
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  Speaker 2: There's the bargaining power of suppliers, there's the bargaining power
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  Speaker 2: of buyers, there's the intensity of rival, and there's the
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  Speaker 2: threat of substitution. And does it boid. The threat of
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  Speaker 2: substitution is biting at nbn co's heels.
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  Speaker 1: That's because customers can now switch to a different service
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  Speaker 1: that meets the exact same need.
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  Speaker 2: And it's often at a lower cost or with a
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  Speaker 2: better value proposition. In fact, be Man the hriable ce
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  Speaker 2: reckons that five hundred thousand Australians now used fixed wireless
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  Speaker 2: access like four G or five G as their primary
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  Speaker 2: home broadband connection, and that's nearly double the number from
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  Speaker 2: two years ago.
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  Speaker 1: So the growing appeal of these substitutes puts more pressure
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  Speaker 1: on nbn to actually improve their service.
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  Speaker 2: So NBNC is trying to defend against this substitution threat
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  Speaker 2: before it erodes its market share. For our third and
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  Speaker 2: final story, Jbhihi celebrated a ten percent jump in sales
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  Speaker 2: and its CEO is resigned with a big payout for investors.
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  Speaker 2: JB's investors going through a roller coaster of promotions right here,
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  Speaker 2: tell me more.
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  Speaker 1: Okay, So Jbhighie is the Australian electronics retail company started
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  Speaker 1: in nineteen seventy.
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  Speaker 2: Four, sales everything from laptops, cameras, gaming consoles, TVs, home appliances, and.
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  Speaker 1: Formerly had a ginormous section for music albums and singles as.
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  Speaker 2: Well good old singles for seven ninety nine each.
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  Speaker 1: And then in the last financial year, JB announced some
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  Speaker 1: very big results.
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  Speaker 2: Their group sales were up by ten percent and their
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  Speaker 2: overall net profit increased by five point four percent.
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  Speaker 1: And as part of this earnings update, their CEO, Terry Smart,
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  Speaker 1: announced he'd be hanging up his CEO lanyard and retiring,
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  Speaker 1: and as a parting gift to shareholders, he announced a
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  Speaker 1: special dividend. But despite these positive results and the special dividend,
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  Speaker 1: JB shares fill nearly eight percent.
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  Speaker 2: Sounds a little strange to some. What is the reason?
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  Speaker 1: Well, largely because investors were morning the news of the
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  Speaker 1: CEO resignation and the unknown of what's to come next interesting.
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  Speaker 2: So what is the key learning here?
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  Speaker 1: Strong numbers don't always mean a strong market reaction, especially
• 5:41
  Speaker 1: when leadership changes happen.
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  Speaker 2: Yep, and a CEO exit can sometimes worry investors more
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  Speaker 2: than strong profits can reassure them.
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  Speaker 1: Even in JB high Eye's case, sales jump, profit lift
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  Speaker 1: and a special dividend weren't enough to stop shares sliding.
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  Speaker 2: That's because Jbhigh Fi CEO has steadied the ship even
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  Speaker 2: in a tough retail environment.
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  Speaker 1: In fact, since he rejoined JB hig By CEO in
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  Speaker 1: twenty twenty one, it shares an increase by more than
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  Speaker 1: one hundred and fifty percent, and a new CEO, even
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  Speaker 1: if it is the current COO, brings some unknowns and
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  Speaker 1: markets hey unknowns and interestingly juzy Wait. When Terry Smart
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  Speaker 1: was first announced CEO in twenty ten, JB share price
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  Speaker 1: also took a hit because investors feared the unknown of
• 6:17
  Speaker 1: a new leader. We've seen this before when Aria Group
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  Speaker 1: CEO stepped down in February.
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  Speaker 2: He beat Aria's half year profit forecast, but its shares
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  Speaker 2: still dipped four percent.
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  Speaker 1: So b man leadership changes can quickly overshadow strong performance
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  Speaker 1: in the eyes of investors. Yep, fox am, do you
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  Speaker 1: know the difference between headline inflation and trimmed mean inflation?
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  Speaker 1: The RBA's favorite word. Right now, let's be beyond. It'll
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  Speaker 1: make a whole lot more sense. In the Flux app today,
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  Speaker 1: we break down why the RBA looks at trimmed mean
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  Speaker 1: inflation and how it impacts their cash right decisions. Make
• 6:44
  Speaker 1: shure to download the Flux app and check it out.
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  Speaker 2: Thanks for listening and we'll see you on Friday.