Latest / What the Flux / RBA big cash rate call | Paramount cuts Netflix's lunch | Airwallex lands massive VC haul

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RBA big cash rate call | Paramount cuts Netflix's lunch | Airwallex lands massive VC haul · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm brand and I'm justin and it's Wednesday, the tenth
• 0:09
  Speaker 2: of December.
• 0:09
  Speaker 1: Josie Boy.
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  Speaker 3: According to the AH Triple C, demand for flying was
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  Speaker 3: at its highest since the pre pandemic over the last quarter,
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  Speaker 3: and as a result, average airfares also reached the highest level.
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  Speaker 1: Since December twenty twenty two.
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  Speaker 3: But Quantus is bringing new, bigger planes and the AH
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  Speaker 3: troble C is hoping, no, it's praying that this means
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  Speaker 3: prices will be starting to drop down.
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  Speaker 2: Getting real exit a fly b Man flame. When the
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  Speaker 2: Reserve Bank of Australia makes its big decision like it
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  Speaker 2: made yesterday, they take into account a few big factors
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  Speaker 2: like inflation unemployment. In the Flux app, we break it
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  Speaker 2: down in a premium article will showing you what the
• 0:42
  Speaker 2: relationship is between inflation and why unemployment is so important
• 0:45
  Speaker 2: to the RBA's decision. So if you want to learn
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  Speaker 2: more and become smarter than your boss, make sure you
• 0:49
  Speaker 2: download the Flux app and check out our.
• 0:50
  Speaker 3: Latest article three massive stories Today, Jozzy Boy, let's do
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  Speaker 3: it for our first the Reserve Bank of Australia has
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  Speaker 3: paused the cash rate at three point six percent in
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  Speaker 3: its final meeting of the year, after inflation reared its
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  Speaker 3: ugly head once again, the.
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  Speaker 2: IRBA decided to avoid drama this festive season. B man, thankfully,
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  Speaker 2: so tell me what's going on here.
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  Speaker 3: So the Reserve Bank of Australia now meets only eight
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  Speaker 3: times each.
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  Speaker 2: Year and they assess the health of the Australian economy
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  Speaker 2: and decide whether it needs a sprinkling of caffeine or
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  Speaker 2: a hard yank.
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  Speaker 1: On the handbreak.
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  Speaker 3: In other words, should we lift the cashert drop the
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  Speaker 3: cash rate or just pause and kick the can down
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  Speaker 3: the road.
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  Speaker 2: And despite inflation popping up like an uninvited cousin at
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  Speaker 2: Christmas lunch, the RBA went for option three.
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  Speaker 3: Yeah, the IRBA has decided to pause the cash rate
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  Speaker 3: at three point six percent and finally enough.
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  Speaker 2: This was good news for homeowners because economists had started
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  Speaker 2: whispering the words that nobody wanted to hear read hike.
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  Speaker 2: But why the sudden vibe shift. Well it's pretty simple,
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  Speaker 2: be man. Australia hasn't quite finished slaying the inflation dragon.
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  Speaker 3: In fact, for the October quarter and your inflation jump
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  Speaker 3: three point eight percent, which is above the RBA's target
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  Speaker 3: of two to three percent.
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  Speaker 2: And then as part of this pause, the RBA governor
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  Speaker 2: had quite a cautious and even weary toad.
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  Speaker 3: Because the IBA is edging over the economy speed limit.
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  Speaker 2: So what is the key learning here?
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  Speaker 3: Every economy has a theoretical speed limit, the fastest it
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  Speaker 3: can grow without sparking inflation.
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  Speaker 2: In Australia's case, that speed limit is roughly two percent
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  Speaker 2: growth in the economy.
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  Speaker 3: If the economy goes any faster than that, then the
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  Speaker 3: system starts to strain.
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  Speaker 2: That means businesses can't hire fast enough.
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  Speaker 3: It means supply chains feel the pressure, and it means
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  Speaker 3: consumers spend more than the economy can comfortably produce. And man,
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  Speaker 3: the RBA says Australia just grew two point one percent
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  Speaker 3: over the year, which is already above that speed limit.
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  Speaker 3: So the RBA governor is choosing her words very carefully
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  Speaker 3: and keeping all future moves on the table.
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  Speaker 2: Yeah, for our second story, Paramount has crashed the Hollywood
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  Speaker 2: party with a one hundred and eight billion US hostile
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  Speaker 2: bid for Warner Brothers.
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  Speaker 1: Discovery.
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  Speaker 3: Put the popcorn in that microwave, Jussy Boy, close the door,
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  Speaker 3: because this is peak Hollywood drama.
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  Speaker 1: Tell me more.
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  Speaker 2: Okay, So Warner Brothers Discovery is the entertainment giant behind HBO, CNN, DC, comics,
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  Speaker 2: Harry Potter, and HBO Max as well.
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  Speaker 3: This is the com that actually merged Warner Brothers and
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  Speaker 3: Discovery back in April twenty twenty two in a forty
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  Speaker 3: three billion dollar merger, and ben Man.
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  Speaker 2: Netflix, well, they need absolutely no introduction at all.
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  Speaker 3: Late last week, Netflix announced a deal to acquire Warner
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  Speaker 3: Brothers Discovery studio and streaming business, including HBO Max.
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  Speaker 1: Yeah.
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  Speaker 2: This is a cash and stock offer that valued this
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  Speaker 2: part of the business at seventy two billion US dollars
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  Speaker 2: in equity.
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  Speaker 3: But this didn't include the Discovery part of the business
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  Speaker 3: and Man.
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  Speaker 2: At the time, this deal was announced and approved by
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  Speaker 2: Warner brother Discoveries board, and it seemed like it was
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  Speaker 2: all wrapped up in a nice and little package until
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  Speaker 2: Paramount Skydans entered the chat.
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  Speaker 1: Yeah.
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  Speaker 2: Paramount is now owned by David Ellison, sign of Oracle
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  Speaker 2: founder Larry Ellison, and.
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  Speaker 3: He has just launched an all cash, hostile takeover to
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  Speaker 3: Warner Brothers Discovery.
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  Speaker 2: Paramount's offered to buy the entirety of Warner Brothers Discovery
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  Speaker 2: in a one hundred and eight billion US dollar all
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  Speaker 2: cash deal. A little late for this deal now, juzzy
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  Speaker 2: boy shortly. And that's why Paramount's offer is a hostile one.
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  Speaker 3: Yeah, they're taking their case directly to Warner brother Discovery's shareholders,
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  Speaker 3: but Warner brow Discoveries board still recommends the Netflix deal
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  Speaker 3: for now.
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  Speaker 1: So what's the key learning here?
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  Speaker 2: A hostile takeover is basically a corporate gait crashing.
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  Speaker 3: It happens when a company attempts to acquire another business
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  Speaker 3: by going directly to shareholders rather than negotiating.
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  Speaker 1: With its board.
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  Speaker 2: It usually occurs when the target company has rejected previous
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  Speaker 2: bids or prefers another buyer, like Warner choosing Netflix. And
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  Speaker 2: in this scenario, Paramount is launching a tender.
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  Speaker 3: Offer that means shareholders receive a public invitation to sell
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  Speaker 3: their shares at a specific price, in this case thirty
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  Speaker 3: bukkerarunies per share, which is even higher than the Netflix
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  Speaker 3: offer of twenty seven dollars per share. And this tender
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  Speaker 3: offer bypasses management entirely.
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  Speaker 1: I mean, for Paramount, the.
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  Speaker 2: Goal is to accumulate enough shares to gain a majority
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  Speaker 2: or controlling stake in Warner Brothers Discovery.
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  Speaker 3: And this would then allow them to replace the existing
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  Speaker 3: board and push the deal through.
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  Speaker 2: And the man, let me tell you, is that the
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  Speaker 2: first time the Ellisons have done a hostile takeover.
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  Speaker 3: All the way back two thousand and five Oracle, which
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  Speaker 3: was bounded by Ellison's father, they launched a hostile takeover
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  Speaker 3: offer for a company called PeopleSoft.
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  Speaker 2: Eblesoft tried to reject the offer multiple times, but Oracle
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  Speaker 2: won enough support from shareholders to force the sale to happen.
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  Speaker 3: Next minute, deal closed and PeopleSoft became part of Oracle's
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  Speaker 3: enterprise software division for ten point three billion US dollars.
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  Speaker 2: So, while tender offers rarely succeed, the Ellisons have a
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  Speaker 2: tried and tested playbook. For our third and final story.
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  Speaker 3: Air Wallex has pulled off Australia's second biggest VC raise
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  Speaker 3: ever with a three hundred and thirty million dollar raise.
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  Speaker 1: But it's not without some controversy.
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  Speaker 2: Juzzy boy, always a little bit of controversy around Airwolex,
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  Speaker 2: b man, So tell me what's going on here.
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  Speaker 3: So air Wallx is a payments giant founded in Melbourne
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  Speaker 3: in twenty fifteen. It started out facilitating cross border business payments.
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  Speaker 2: Since then, it's expanded into cards and spend management and
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  Speaker 2: other financial services too.
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  Speaker 1: Get this one.
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  Speaker 3: It took air Wolex nine years to hit five hundred
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  Speaker 3: million dollars in annual occurring.
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  Speaker 2: Revue, but then it only took them one more year
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  Speaker 2: to double that to a billion dollars in annual revenue.
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  Speaker 2: And now air Walex is writing that momentum to raise
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  Speaker 2: three hundred and thirty million US dollars in a series
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  Speaker 2: G round series G yep exactly, and this raise values
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  Speaker 2: Airwolex had eight billion US dollars, which is up about
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  Speaker 2: a third from only six months ago. But Dozzy boy,
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  Speaker 2: Airwalleks has its chest out right now. It claims it
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  Speaker 2: didn't even need this money from the capital race. Now, No, no, no,
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  Speaker 2: It was just about the momentum and taking advantage of
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  Speaker 2: the moment So what is the key learning here? Raising
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  Speaker 2: capital isn't always about necessity. It's also about buying optionality.
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  Speaker 3: You see, when a company is performing well, like doubling
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  Speaker 3: its revenue in twelve months, investors are very eager to
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  Speaker 3: jump on board. And when investors are eager to jump
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  Speaker 3: on board, it allows the company to raise money on
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  Speaker 3: highly favorable terms and doesy Boy. Many strategically thinking startups
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  Speaker 3: go down the path of raising when they have the
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  Speaker 3: momentum rather than when they actually need the money.
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  Speaker 2: So for Airlex, being fully funded means they can control
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  Speaker 2: the timing of their eventual initial public offering.
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  Speaker 3: And they don't have to rush to list if the
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  Speaker 3: market is weak because their cash staff.
• 6:43
  Speaker 2: Flux an inflation and unemployment are a little bit like
• 6:46
  Speaker 2: Harry Potter and Baltimore, two opposing forces, or maybe not.
• 6:49
  Speaker 2: If you want to become smart new Bus and learn
• 6:51
  Speaker 2: more about why the cash rate moves up and down,
• 6:54
  Speaker 2: make sure to download their Flex app and check it out.
• 6:55
  Speaker 1: Thanks for listening and we'll see you on Friday,