Latest / What the Flux / KFC faces a beefy war | Nike stumbles over tariffs | Apple's largest wipeout on record

Transcript

KFC faces a beefy war | Nike stumbles over tariffs | Apple's largest wipeout on record · What the Flux

• 0:05
  Speaker 1: This is what the flux.
• 0:06
  Speaker 2: I'm Brett and I'm Justin and it's Monday the seventh.
• 0:09
  Speaker 1: Today, Pril Juzzy boy, it is tariff, central, left, right
• 0:12
  Speaker 1: and the center. Now companies and investors are cleaning up
• 0:16
  Speaker 1: the mess from Liberation Day. In fact, last week, nearly
• 0:18
  Speaker 1: four trillion dollars was wiped from the NASDAQ one hundreds
• 0:21
  Speaker 1: and that's the biggest drop since twenty twenty.
• 0:23
  Speaker 2: We know what happened then, b Man Fox am March
• 0:25
  Speaker 2: on the ASEX was not a pretty month. It dropped
• 0:28
  Speaker 2: more than four percent, but there were still four companies
• 0:30
  Speaker 2: that saw their share price jump more than ten percent.
• 0:33
  Speaker 2: And interestingly, there is one particular industry that dominated. We've
• 0:36
  Speaker 2: got it all covered in the Flux at this month,
• 0:38
  Speaker 2: So if you want to learn which industry outperform the rest,
• 0:40
  Speaker 2: make sure to check out and the Fox out.
• 0:42
  Speaker 1: Three spectacular stories today, Juzzy boy, let's do it for
• 0:45
  Speaker 1: our first. The owner of KFC stores in Australia, Collins Foods,
• 0:49
  Speaker 1: has seen it shares drop nearly three percent, as Trump's
• 0:52
  Speaker 1: tariffs might result in more beef eaters in Australia.
• 0:56
  Speaker 2: US politics actually changing how we pick up fast food
• 0:59
  Speaker 2: meals now b man anymore?
• 1:00
  Speaker 1: Well, Colin's Foods is the ASX listed restaurant operator that
• 1:03
  Speaker 1: runs KFC and Taco Bell restaurants.
• 1:06
  Speaker 2: We'd be talking more than two hundred and seventy five
• 1:08
  Speaker 2: kfsa's in Australia, sixteen in Germany, fifty six in the Netherlands.
• 1:11
  Speaker 1: Don't you dare forget those twenty seven Taco bells. Juzzy
• 1:14
  Speaker 1: Boy irrelevant?
• 1:15
  Speaker 2: Now me man. We know that Donald J. Trump whacked
• 1:17
  Speaker 2: a ten percent tariff on Australian goods, including beef exports,
• 1:21
  Speaker 2: and now the share price of Colin's Foods has dropped
• 1:23
  Speaker 2: nearly three percent. Interesting. Colin's Foods does chickens? How does
• 1:26
  Speaker 2: that wear well?
• 1:27
  Speaker 1: With Australian beef looking likely to become more expensive in
• 1:30
  Speaker 1: the US, Australian beef producers are looking likely to sell
• 1:33
  Speaker 1: beef domestically instead, and at more competitive prices.
• 1:37
  Speaker 2: Think two for one whoppers two dollars quarter pounders. It
• 1:40
  Speaker 2: is a burger bonanza.
• 1:41
  Speaker 1: And Juzzy Boy this aimed fingerlicking good use for Colin's
• 1:44
  Speaker 1: Foods investors.
• 1:45
  Speaker 2: No, they're more than a little worried about a price
• 1:48
  Speaker 2: war between fried chicken and burger.
• 1:50
  Speaker 1: Chains, and this could hurt the profit margins of fried
• 1:52
  Speaker 1: chicken big time.
• 1:54
  Speaker 2: Yep, So what is the key leading here?
• 1:55
  Speaker 1: When a major export destination becomes less attractive, supply often
• 2:00
  Speaker 1: shifts back to a domestic market.
• 2:02
  Speaker 2: Get this, bee Man. In twenty twenty four alone, nearly
• 2:05
  Speaker 2: thirty percent of Australian beef exports were headed to the US.
• 2:08
  Speaker 1: And with a ten percent tariff on these exports, it
• 2:10
  Speaker 1: could lead to a sharp reduction in demand from the
• 2:13
  Speaker 1: US and.
• 2:13
  Speaker 2: A sharp reduction in the profit margin for Australian beef producers. Ultimately,
• 2:18
  Speaker 2: leading beef produces selling it cheaper locally.
• 2:20
  Speaker 1: Now, that's a win for burger chains like McDonald's and
• 2:23
  Speaker 1: Hungry Jacks, which may benefit from lower beef costs.
• 2:27
  Speaker 2: But for chicken centric businesses like Collins Foods, it's a
• 2:29
  Speaker 2: different story.
• 2:30
  Speaker 1: You see, approximately ninety five percent of Australia's chicken is
• 2:34
  Speaker 1: consumed domestically.
• 2:35
  Speaker 2: So the poultry industry's cost structures are already set up
• 2:39
  Speaker 2: for the Australian market.
• 2:40
  Speaker 1: And they aren't set up for a trade war against
• 2:42
  Speaker 1: the big producers of beef.
• 2:44
  Speaker 2: So be Man. That means a switch from a Zingerberger
• 2:46
  Speaker 2: to a quarter pounder burger might become even more appealing.
• 2:50
  Speaker 1: For our second story, Nike has seen at share price
• 2:53
  Speaker 1: plummet after Donald Trump's new tariff on Vietnamese imports.
• 2:57
  Speaker 2: Jeez, just as Nike was limping already, be Man not
• 3:00
  Speaker 2: what they need right now, So tell me more.
• 3:02
  Speaker 1: Well, Josey boy, we know that DJT whacked tariffs on
• 3:05
  Speaker 1: more than ninety countries around the world on Thursday.
• 3:08
  Speaker 2: Kind of felt like he was picking names out of
• 3:09
  Speaker 2: a hat with his eyes closed.
• 3:11
  Speaker 1: Some countries, like Australia in the UK were hit with
• 3:13
  Speaker 1: ten percent standard tariffs.
• 3:15
  Speaker 2: While other countries were hit with much bigger tariffs, including Vietnam,
• 3:18
  Speaker 2: which was whacked with a forty six percent of tariff.
• 3:21
  Speaker 1: But now, Josey boy, Nike has seen its share price
• 3:23
  Speaker 1: tumble six percent after this big news.
• 3:25
  Speaker 2: That's because Nike produces fifty percent of a choose and
• 3:28
  Speaker 2: twenty eight percent of its apparel in you guessed, Vietnam.
• 3:31
  Speaker 1: And given this monstrous tariff, Nike needs to find a
• 3:34
  Speaker 1: way to bring its goods into the US at a
• 3:37
  Speaker 1: reasonable price and be man.
• 3:38
  Speaker 2: This continues from Nike's rocky March as well, where they
• 3:41
  Speaker 2: saw a twenty percent dip in their share price.
• 3:44
  Speaker 1: Guess it goes to show you you just got to
• 3:46
  Speaker 1: spread the love when it comes to manufacturing.
• 3:49
  Speaker 2: So what is the key learning here?
• 3:50
  Speaker 1: When companies rely heavily on one country for production, any
• 3:53
  Speaker 1: disruption can trigger big financial consequences.
• 3:56
  Speaker 2: It might be tariffs, it might be political tension. It
• 3:58
  Speaker 2: might even be the risk of an actual disaster in
• 4:00
  Speaker 2: that country.
• 4:01
  Speaker 1: And the irony is that Nike moved a lot of
• 4:03
  Speaker 1: its production to Vietnam during Trump's first presidency.
• 4:06
  Speaker 2: That was when trade tensions with China were heating up.
• 4:09
  Speaker 1: At the time, it was seen as a smart hedge
• 4:11
  Speaker 1: against relying too much on China.
• 4:13
  Speaker 2: But Beman, sometimes even friendly trading partners like Vietnam can
• 4:16
  Speaker 2: find themselves on the receiving end of economic pressure.
• 4:19
  Speaker 1: Ultimately, companies can diversify their supply chain to reduce their risk.
• 4:22
  Speaker 2: That means spreading production across multiple countries and even more regions.
• 4:26
  Speaker 1: And Jugie Boy Nike ain't the only clothing company that
• 4:30
  Speaker 1: invested big time in Vietnam.
• 4:31
  Speaker 2: Now Addedas also produces nearly forty percent of its footwear
• 4:35
  Speaker 2: in Vietnam. But the man Nike's breathing a small sigh
• 4:37
  Speaker 2: of relief after Trump claimed he had a constructive call
• 4:40
  Speaker 2: with Vietnam, so maybe it won't hit them as hard
• 4:42
  Speaker 2: as they thought. Neil for our third and final story,
• 4:45
  Speaker 2: Apple has become one of the biggest losers of the
• 4:48
  Speaker 2: global tariffs, with its largest one day valuation wipeout on record.
• 4:52
  Speaker 1: Apple shehare Price just experienced the same sinking feeling that
• 4:55
  Speaker 1: I feel when I dropped my iPhone face down on
• 4:57
  Speaker 1: the floor, A very scary moment, Juzzi Boy, So tell
• 4:59
  Speaker 1: me more.
• 5:00
  Speaker 2: Okay, So we know Apple as the world's most valuable company.
• 5:02
  Speaker 1: We're talking hardware like iPhone and iPad, wearables like the
• 5:05
  Speaker 1: Apple Watch.
• 5:06
  Speaker 2: And software like Yicloud and even Apple TV Plus.
• 5:09
  Speaker 1: In fact, Jazzy Boy, Apple's iPhone division alone is big
• 5:12
  Speaker 1: enough to rank in the Fortune five hundred's top thirty companies.
• 5:15
  Speaker 2: Wow, but now, b Man, Apple's lost over three hundred
• 5:18
  Speaker 2: billion US dollars in market value, and.
• 5:20
  Speaker 1: That's the biggest one day drop in history.
• 5:22
  Speaker 2: I'm assuming you're going to drop the big T word
• 5:23
  Speaker 2: for the reason, b Man, correct.
• 5:25
  Speaker 1: A mundo, Juzzy Boy. Trump has announced a thirty four
• 5:27
  Speaker 1: percent tariff on Chinese imports as part of Liberation Day
• 5:31
  Speaker 1: and while.
• 5:31
  Speaker 2: Apple loves to say it's products are designed in California,
• 5:34
  Speaker 2: the assembly actually happens in China.
• 5:36
  Speaker 1: As a result, Apple was hit hard by this tariff.
• 5:39
  Speaker 2: In fact, did share price drop more than nine percent.
• 5:42
  Speaker 1: And while Apple's currently in the pain cave right now,
• 5:45
  Speaker 1: the ripple effect might hit consumers and competitors next.
• 5:48
  Speaker 2: Yep. So what is the key learning here?
• 5:50
  Speaker 1: Tariffs might start as a tax on imports, but they
• 5:53
  Speaker 1: end up as a tax on consumers.
• 5:55
  Speaker 2: You see, b man, When tariffs is slapt on imported goods,
• 5:58
  Speaker 2: businesses face high costs.
• 6:00
  Speaker 1: And let me tell you one thing, juzyboy, businesses don't
• 6:02
  Speaker 1: just happily absorb.
• 6:04
  Speaker 2: The hitt No, no, no, they raised their prices.
• 6:06
  Speaker 1: We'd be talking everything from phones and electronics to food
• 6:10
  Speaker 1: and household items.
• 6:11
  Speaker 2: And they man at tariffs tend to make everything more expensive.
• 6:15
  Speaker 1: In fact, take the twenty eighteen US China trade war.
• 6:18
  Speaker 2: During this period, the US impoves tariffs on a broad
• 6:21
  Speaker 2: range of Chinese imports.
• 6:22
  Speaker 1: And studies by the Fed Reserve Bank of New York
• 6:24
  Speaker 1: they actually showed that these tariffs were largely passed on
• 6:27
  Speaker 1: to consumers.
• 6:28
  Speaker 2: They estimated that by May twenty nineteen, these tariffs were
• 6:31
  Speaker 2: costing the average American household more than four hundred US
• 6:34
  Speaker 2: dollars per year.
• 6:35
  Speaker 1: And jugeboy, those tariffs were nothing compared to the Liberation
• 6:38
  Speaker 1: Day tariffs.
• 6:39
  Speaker 2: Fox Am, there was one big industry that absolutely smashed
• 6:43
  Speaker 2: the markets in March on the ASX and got many others.
• 6:45
  Speaker 2: If you want to learn what that industry was and
• 6:48
  Speaker 2: why and forth so well, make sure to check out
• 6:50
  Speaker 2: our article in the Flux out.
• 6:51
  Speaker 1: Thanks for listening, and we'll see you on Wednesday