WEBVTT - RBA's pause for concern | Woolworths slashes prices | OpenAI's biggest capital raise... ever

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<v Speaker 1>This is what the Flux.

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<v Speaker 2>I'm Brettan, I'm justin and it's Wednesday, the second of April.

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<v Speaker 1>Chusey boy, it's officially by by to Vintage Sellers and

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<v Speaker 1>first Choice liquor or as calls like to say they've

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<v Speaker 1>gone into retirement from April. They'll all co by some

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<v Speaker 1>version of Liquor Land, which supposedly has much better brand

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<v Speaker 1>awareness than the others. Seems like all liquor stores still

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<v Speaker 1>battling against the all mighty Dan Daniel, Dan the Man Murphy,

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<v Speaker 1>very true.

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<v Speaker 2>Man buck mamma. We saw the Reserve Bank make a

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<v Speaker 2>big call yesterday on the cash rate and we have

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<v Speaker 2>it all covered in the Flux App, including a deep

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<v Speaker 2>dive into what a thirty six straight mortgage might look like.

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<v Speaker 2>So if you're interested in what that is and how

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<v Speaker 2>potentially could come to Australia and make sure to check

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<v Speaker 2>it out in the Flux app.

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<v Speaker 1>Three truly inspiring stories today, Jessey boy, Let's do it

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<v Speaker 1>for our first. The Reserve Bank of Australia has paused

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<v Speaker 1>the cash rate at four point one percent because it

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<v Speaker 1>doesn't want to make any big moves before Donald J.

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<v Speaker 1>Trump's tariffs.

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<v Speaker 2>The RBA are certainly a cautious lot b man, so

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<v Speaker 2>this isn't that surprising, tell me all.

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<v Speaker 1>Well, juzzy boy. The RBA is obviously Australia Central Bank,

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<v Speaker 1>which sets the cash rate.

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<v Speaker 2>That's the interest rate that thanks lend to each other

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<v Speaker 2>for borrowing.

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<v Speaker 1>So when the RBA's cash rate goes up, the interest

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<v Speaker 1>rate on your home loan typically goes up, and when

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<v Speaker 1>the cash.

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<v Speaker 2>Rate goes down, the interest rate typically goes down.

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<v Speaker 1>Now, in feb the RBA cut the cash rate by

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<v Speaker 1>zero point two five percent, down to four point one percent.

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<v Speaker 2>And homeowners were shook us in a good way because

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<v Speaker 2>the first cash rate cut they'd enjoyed since November twenty twenty.

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<v Speaker 1>And now, Juzzy boy, the RBA crew have met once

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<v Speaker 1>more with some new members and made their big call

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<v Speaker 1>for April.

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<v Speaker 2>And despite the date being April Fool's Day, the RBA

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<v Speaker 2>were not clowning around.

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<v Speaker 1>I can confirm there were no stand up routines or

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<v Speaker 1>whoopy cushions on the chairs.

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<v Speaker 2>And no, we've dropped rates to zero percent. Just kidding, nah.

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<v Speaker 1>They decided to sternly and seriously pause the cash rate

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<v Speaker 1>at four point one percent.

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<v Speaker 2>The main reason they wanted to wait until Donald Trump's

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<v Speaker 2>global tariffs are in iplemented before making any big decision.

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<v Speaker 1>Yep, Trump's tariffs are supposed to come into effect.

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<v Speaker 2>Today, or, as he calls it, Liberation Day.

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<v Speaker 1>The biggest fear for many economists is that these huge

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<v Speaker 1>tariffs could lead to global stagflation.

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<v Speaker 2>So what is the key learning here?

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<v Speaker 1>Stagflation is when a country suffers from stagnant economic growth

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<v Speaker 1>and high inflation at the very same time.

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<v Speaker 2>It's called the terrible two yes ce juz boy.

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<v Speaker 1>When wages aren't rising and jobs are not booming, you'd

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<v Speaker 1>expect economic growth to slow down.

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<v Speaker 2>Because when the economy isn't doing well, people and businesses

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<v Speaker 2>tend to spend less.

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<v Speaker 1>But during stagflation, prices keep rising despite a slow economy.

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<v Speaker 2>The man Right now, global markets are spooked by the

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<v Speaker 2>potential impact of Trump's tariffs.

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<v Speaker 1>And investors fear that Trump's tariffs will make that nightmare real.

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<v Speaker 2>And then, man, we've already seen the caution in the

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<v Speaker 2>share market, with the NAZDAK one hundred down more than

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<v Speaker 2>eight percent so far.

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<v Speaker 1>This year, and even the ASX two hundred has been

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<v Speaker 1>down nearly three and a half percent this year so far.

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<v Speaker 2>So the man holding rate steady gives the RBA more

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<v Speaker 2>time to see how this plays.

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<v Speaker 1>Out, especially with a wildcard like the US in the mix.

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<v Speaker 2>For our second story, Woolies has slashed the price on

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<v Speaker 2>its groceries last month to close the gap on AUDI

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<v Speaker 2>and deflect atension from AAAK and the election campaign.

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<v Speaker 1>Nothing to legislate here, folks. Just a community serving, small

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<v Speaker 1>supermarket chain is what we are. What is going on here?

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<v Speaker 2>Okay? So we know that Woolies is Australia's largest supermarket

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<v Speaker 2>chain with nearly thirty seven percent of the grocery market.

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<v Speaker 1>And jusiboy, there's a Woolwortz or a Woolies Metro on

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<v Speaker 1>almost every single corner of this great land.

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<v Speaker 2>In fact, be Man Woolarts has over eleven hundred stores

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<v Speaker 2>across Australia. That is more than there are makers.

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<v Speaker 1>And while Woolies has been steadily increasing their grocery prices

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<v Speaker 1>over the last year or so, March was a totally

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<v Speaker 1>different story.

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<v Speaker 2>Yeah, Woolies cut their prices in March significantly. According to

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<v Speaker 2>JP Morgan.

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<v Speaker 1>The goal has been to bring the grocery price gap

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<v Speaker 1>with AUDI to its lowest point in two years.

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<v Speaker 2>Be Man Let's be honest, the timing is suspiciously convenient.

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<v Speaker 1>Yeah, Both Woolies and Coals are under pressure from the

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<v Speaker 1>AH Triple c's ongoing investigation as well.

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<v Speaker 2>As polics being in full crackdown on greedy corporate's mood

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<v Speaker 2>ahead of the election.

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<v Speaker 1>In particular, Woolies and colls have heard threats about legislating

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<v Speaker 1>against price gouging in supermarkets.

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<v Speaker 2>So what is the key learning here?

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<v Speaker 1>Supermarkets know the biggest threat to their empires isn't cheaper

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<v Speaker 1>toilet paper, it's tighter regulation.

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<v Speaker 2>And right now, be man, Woolies and coals biggest fear

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<v Speaker 2>is legislation that will stop them from growing market share

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<v Speaker 2>and growing profit margin.

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<v Speaker 1>There are already laws banning price fixing between supermarkets, there

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<v Speaker 1>are laws to ban predatory pricing that wipes out smaller competitors,

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<v Speaker 1>and there are also laws to stop misleading price signage.

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<v Speaker 2>But there's no laws stopping a supermarket from just jacking

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<v Speaker 2>out prices to make more profit.

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<v Speaker 1>That's what the government is calling price gouging. So juzzy boy,

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<v Speaker 1>it's no surprise that as these threats come in, Woolies

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<v Speaker 1>and Coals are dropping prices.

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<v Speaker 2>Yeah, they're now only seven point eight percent and eight

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<v Speaker 2>point five percent more expensive than Audi, respectively.

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<v Speaker 1>Down down from eleven percent plus just last year. That's

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<v Speaker 1>according to JP Morgan.

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<v Speaker 2>So now it's all about the optics for the supermarkets,

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<v Speaker 2>keeping things look in friendly fair.

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<v Speaker 1>For our third and final story, open ai has announced

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<v Speaker 1>that it's closed the largest round of capital ever raised

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<v Speaker 1>by a private company, pocketing a tasty forty billion US dollars.

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<v Speaker 2>Wow, they've raised more than the whole value of Telstra

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<v Speaker 2>in just one afternoon, b Man, so tell me more well.

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<v Speaker 1>Open Ai launched in twenty fifteen as a nonprofit research

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<v Speaker 1>lab that focused on exploring AI and ensuring it benefited

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<v Speaker 1>all of humanity.

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<v Speaker 2>In twenty twenty two, b Man open Ai launched its

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<v Speaker 2>now famous chatbot, chatchapt, which revolutionized how everyone did things

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<v Speaker 2>like applying for jobs, like getting travel tips, like writing

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<v Speaker 2>university essays. In fact, be Man chatchpt became the fastest

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<v Speaker 2>growing consumer app ever, hitting one hundred million users in

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<v Speaker 2>just two months.

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<v Speaker 1>And now chatchpt has more than five hundred million weekly

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<v Speaker 1>users and open ai has become a household name.

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<v Speaker 2>So now open AI's raised forty billion US dollars, which

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<v Speaker 2>values the company at three hundred billion US dollars.

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<v Speaker 1>And Jullie Boyd. This has become the largest ever round

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<v Speaker 1>of capital raised, more than triple the previous record.

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<v Speaker 2>But be Man. Because of the unique structure of open

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<v Speaker 2>ai as part four profit and part nonprofit, the shares

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<v Speaker 2>are expected to be issued as convertible notes.

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<v Speaker 1>So what's okay learning here?

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<v Speaker 2>A convertible note is essentially a load that can be

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<v Speaker 2>converted into shares of the company at a later date.

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<v Speaker 1>There are specific events that cause the convertible note to

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<v Speaker 1>convert into equity. In this case, the condition is when

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<v Speaker 1>open ai converts into a four profit structure, which must

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<v Speaker 1>happen by the end of twenty twenty five.

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<v Speaker 2>In fact, be Man, open Ai will only receive ten

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<v Speaker 2>billion US dollars.

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<v Speaker 1>Up front, and if they're unable to convert to a

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<v Speaker 1>for profit structure, this forty bill may end up being

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<v Speaker 1>just twenty bill.

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<v Speaker 2>Just twenty bill. Flexam, have you ever heard about the

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<v Speaker 2>thirty year fixed strate mortgage? It is very hot in

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<v Speaker 2>the US, but it doesn't exist in Australia yet. We

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<v Speaker 2>break it down in the flux app what it is,

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<v Speaker 2>how it's used, and why it might be useful to

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<v Speaker 2>have in Australia as well. To make sure to download

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<v Speaker 2>the Flux app to check it out.

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<v Speaker 1>Thanks for listening and we'll see you on Friday.