Latest / What the Flux / RBA pushes rates to 15-year high | Cochlear hit with shareholder class action | AI-agent Instinct quadruples value in 1 month

Transcript

RBA pushes rates to 15-year high | Cochlear hit with shareholder class action | AI-agent Instinct quadruples value in 1 month · What the Flux

• 0:01
  Speaker 1: Thank you.
• 0:05
  Speaker 2: This is The Flux. I'm Brett.
• 0:07
  Speaker 1: And I'm Justin. And it's Wednesday the 30th of September.
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  Speaker 3: Jazzy boy, Treasurer Jim Chalmers is about to set a
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  Speaker 3: new record. Just not the kind Australians are actually going
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  Speaker 3: to celebrate. He's on track to become the highest taxing
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  Speaker 3: treasurer in Australian history. Tax is expected to surpass 24%
• 0:21
  Speaker 3: of the entire economy for the first time ever. So no,
• 0:24
  Speaker 3: it's not just you. The tax man really is taking
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  Speaker 3: a bigger slice of the pie.
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  Speaker 1: But a little personal note from me before we kick
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  Speaker 1: off today's pod. After more than six years, 1,500 episodes,
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  Speaker 1: and a whole lot of laughs, and a few cries,
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  Speaker 1: I'm going to be moving on from Flux and the
• 0:37
  Speaker 1: pod in two weeks' time. Now, the show's obviously still
• 0:39
  Speaker 1: in great hands with Brett, Marissa, and the rest of
• 0:41
  Speaker 1: the Flux team, and I'll most certainly be listening. Now
• 0:44
  Speaker 1: that I don't need to hear the sound of my
• 0:45
  Speaker 1: own voice on it, but I've still got two more
• 0:47
  Speaker 1: weeks with you, I'll definitely make them count.
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  Speaker 3: Obviously very sad, Jazzy Boy. It's been an amazing journey.
• 0:52
  Speaker 3: I think between you and I, we've hardly missed any
• 0:54
  Speaker 3: episodes over the last six years. So Flux fam, it
• 0:57
  Speaker 3: is obviously a big change, but the Flux team is
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  Speaker 3: very excited about the future of the pod. We've got
• 1:01
  Speaker 3: some big ideas in mind and can't wait to share
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  Speaker 3: those with you in time.
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  Speaker 2: And on that note, Jazzy Boy, three massive stories today.
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  Speaker 1: Let's do it.
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  Speaker 2: For our first.
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  Speaker 3: The RBA has hiked rates for the fourth time this year,
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  Speaker 3: pushing the cash rate to 4.6%, its highest level since 2011.
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  Speaker 1: Spring has sprung and so have interest rates, B-Man. So
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  Speaker 1: tell me more.
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  Speaker 3: Well, Jazzy Boy, the RBA meets eight times a year
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  Speaker 3: to set the cash rate after looking at a heap
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  Speaker 3: of data about the health of the Australian economy, including inflation.
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  Speaker 1: Yeah. Now, B-Man, the cash rate started 2026 at 3.6%.
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  Speaker 1: Then it hiked three times to hit 4.35%.
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  Speaker 2: Then the RBA hit pause twice. But the pause button.
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  Speaker 1: Was officially unpressed yesterday, Arvo, with the RBA lifting the
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  Speaker 1: cash rate to 4.6%. percent in a unanimous decision that.
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  Speaker 2: Is the highest it's been since november 2011.
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  Speaker 1: And australia now has the unenviable title of the second
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  Speaker 1: highest cash rate in the developed world behind iceland.
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  Speaker 3: Yeah to put that into some historical context the last
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  Speaker 3: time rates were this high adele was singing someone like
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  Speaker 3: you instagram was basically just photos of brunch with a
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  Speaker 3: filter australians were planking on things for reasons that no
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  Speaker 3: one can explain and b man it.
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  Speaker 1: Ain't over either because based on the rba governor's press
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  Speaker 1: conference it feels like a a couple more rate rises
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  Speaker 1: are likely over the next six months.
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  Speaker 3: So, Jazzy, if we run the numbers, someone with an
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  Speaker 3: average mortgage of $ 736, 000 is now paying about $ 430 more
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  Speaker 3: a month than in January this year.
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  Speaker 1: Or $ 5, 000 more per year.
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  Speaker 3: But it's not just about what's leaving your bank account.
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  Speaker 3: The increased cash rate also impacts how rich you feel. Mmm.
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  Speaker 1: So what is the key learning here?
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  Speaker 3: The wealth effect is the change in consumer spending when
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  Speaker 3: people perceive themselves to be wealthier or poorer.
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  Speaker 1: The wealth effect isn't just about how much money you have.
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  Speaker 1: It's about how wealthy you feel. So, B-Man, these rate
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  Speaker 1: hikes hit in two ways. The first is very real.
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  Speaker 1: More of your pay goes straight to your mortgage. That's
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  Speaker 1: money you literally can't spend on dinners or holidays or
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  Speaker 1: a new couch.
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  Speaker 2: The second is more mental.
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  Speaker 1: Yeah. You see, B-Man, home values fell in 93% of
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  Speaker 1: capital city suburbs over winter this year. And when the
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  Speaker 1: value of a mortgage holder's home is less, borrowers tend
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  Speaker 1: to feel poorer and then tighten the purse strings. Less
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  Speaker 1: retail therapy, less holidays, less guac on your burrito.
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  Speaker 3: And this has a flow-on effect to retailers across the
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  Speaker 3: Australian economy.
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  Speaker 1: So, B-Man, today's hike hits Aussie twice. Once in the
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  Speaker 1: bank account and once in the head.
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  Speaker 3: For our second story, Cochlear, the Aussie hearing implant maker,
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  Speaker 3: has been hit with a shareholder class action five months
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  Speaker 3: after its share price fell off a cliff.
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  Speaker 1: Cochlear shareholders making some noise here, B-Man. Tell me more.
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  Speaker 3: Well, Cochlear is the ASX listed company behind the Bionic Ear,
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  Speaker 3: and it's one of the biggest hearing implant makers on
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  Speaker 3: the planet.
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  Speaker 1: But five months ago, investors got an update they definitely
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  Speaker 1: didn't like the sound of.
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  Speaker 3: The company cut its profit guidance from as high as
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  Speaker 3: 460 million bucks to as low as $ 290.
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  Speaker 1: And why this sudden dramatic shift?
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  Speaker 3: Well, they said it had already suffered softer sales and
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  Speaker 3: there's also the uncertainty going on in the Middle East.
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  Speaker 1: And then on the day of the announcement, their share
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  Speaker 1: price dropped 40% or a lazy $ 4 billion. It was
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  Speaker 1: their lowest share price in over a decade.
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  Speaker 3: And now a group of shareholders has taken Cochlear to
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  Speaker 3: the Supreme Court of Victoria.
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  Speaker 1: On behalf of anyone who bought shares in the eight
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  Speaker 1: months before the downgrade. But Bayman, Cochlear denies these allegations.
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  Speaker 1: and says it'll defend the case because it reckons its
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  Speaker 1: disclosures were A-OK. Interesting.
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  Speaker 2: So what's the key learning here?
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  Speaker 1: On the ASX, companies are allowed to have a bad year.
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  Speaker 1: They just can't sit on dramatic news for very long.
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  Speaker 3: Jazzy boy, listed companies have something called continuous disclosure obligations.
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  Speaker 3: If they know something that would move the share price,
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  Speaker 3: they generally have to tell the market pretty quickly.
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  Speaker 2: No keeping secrets from your shareholders.
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  Speaker 1: So BMN, how does a bad profit update end up
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  Speaker 1: in court?
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  Speaker 3: Well, these class actions usually argue the company knew things
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  Speaker 3: were going south earlier than they actually let on.
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  Speaker 1: Which means investors bought shares at a price that, in hindsight,
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  Speaker 1: was too high.
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  Speaker 2: And these cases just got a lot more serious.
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  Speaker 3: Yeah.
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  Speaker 1: In April this year, Brambles, the ASX-listed logistics provider, became
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  Speaker 1: the first shareholder class action in Australia to win at trial.
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  Speaker 3: That was after a court found that it didn't disclose
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  Speaker 3: a known change in its profit guidance. So B-Man, this
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  Speaker 3: case will come down to what Cochlear knew and when,
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  Speaker 3: but Cochlear says it did nothing wrong. For our third
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  Speaker 3: and final story, Instinct, the AI assistant that does your
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  Speaker 3: life admin for you, has quadrupled its valuation to $ 10
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  Speaker 3: billion in a month, and it doesn't even have an
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  Speaker 3: app yet.
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  Speaker 1: Investors really going with their gut instinct on this startup,
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  Speaker 1: eh man? So tell me more.
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  Speaker 3: So Instinct is an AI assistant launched as an invite-only
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  Speaker 3: tool in August this year.
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  Speaker 1: Yeah, it was founded by a 23-year-old who dropped out
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  Speaker 1: of university to write research papers on AI agents.
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  Speaker 2: And then he built Instinct.
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  Speaker 1: And supposedly every man, woman, and dog in Silicon Valley
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  Speaker 1: is talking about Instinct and begging for an invite.
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  Speaker 2: You can book your travel, pay your bills, even cancel subscriptions.
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  Speaker 1: Can't the others do that too?
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  Speaker 3: Well, yes, but it's got its own phone number and
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  Speaker 3: computer and can make calls on your behalf.
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  Speaker 2: So it can sit on hold with Qantas for me?
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  Speaker 1: That is revolutionary. Exactly.
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  Speaker 2: And there's no app. You kind of just text like
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  Speaker 2: you would to a friend.
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  Speaker 1: But B-Man, the real story is how fast investors are
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  Speaker 1: throwing money at Instinct.
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  Speaker 3: About a month ago, Instinct raised capital at a $ 2. 5
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  Speaker 3: billion US dollar valuation.
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  Speaker 1: And now a month later, it's raised at a $ 10
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  Speaker 1: billion US dollar valuation.
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  Speaker 3: And may I add, Jazzy Boy, Instinct only has 14 employees.
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  Speaker 3: So it's quadrupled its value in a month with no
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  Speaker 3: app and no public user numbers. Sounds about right for
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  Speaker 3: the AI hype. Yep.
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  Speaker 2: And it's really worked that old invitation-only game.
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  Speaker 1: So what is the key learning here?
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  Speaker 3: Invitation-only means you can't just sign up to this product.
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  Speaker 3: Someone has to let you in and it does two
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  Speaker 3: very different jobs. Job one is the sensible one. It
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  Speaker 3: slows growth down on purpose so the team can fix
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  Speaker 3: bugs and learn what you actually want. Job two is
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  Speaker 3: a bit of the cheeky one, making people desperate.
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  Speaker 1: To get in.
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  Speaker 2: That is called artificial scarcity.
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  Speaker 1: And B-Man, I remember this back in 2021 when Clubhouse,
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  Speaker 1: the social audio app, succeeded with this marketing ploy.
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  Speaker 2: Yep, invites were listed on eBay for hundreds of dollars.
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  Speaker 1: Once Clubhouse opened the doors to everyone, the buzz fizzled
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  Speaker 1: pretty quickly. So for instinct, the exclusive invite list buys
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  Speaker 1: them time to refine the product and build a whole
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  Speaker 1: lot of hype and raise a whole lot of money
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  Speaker 1: before the broader launch.
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  Speaker 3: But Jazzy Boy, the real test is whether people stick
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  Speaker 3: around once... There is no Q.
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  Speaker 1: Fluxam, there is so much movement this year from the RBA,
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  Speaker 1: lifting the cash rate four times. So there is a
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  Speaker 1: lot of information out there. We break it all down
• 7:00
  Speaker 1: in the Flux app, explaining why the RBA made their
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  Speaker 1: decision and whether the Federal Reserve in the US had
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  Speaker 1: any impact. So if you want to learn more about
• 7:07
  Speaker 1: the RBA's big decision, make sure to download the Flux
• 7:09
  Speaker 1: app and check out our latest articles.
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  Speaker 2: Thanks for listening and we'll see you on Friday.