1 00:00:00,320 --> 00:00:03,280 Speaker 1: Good morning and happy Friday. It is the twenty eighth 2 00:00:03,360 --> 00:00:06,520 Speaker 1: of January. You're joined Visara and Sam co founders of 3 00:00:06,600 --> 00:00:08,840 Speaker 1: the Daily Os, here to take you through the top 4 00:00:08,920 --> 00:00:11,280 Speaker 1: stories of the day and then to jump into a 5 00:00:11,320 --> 00:00:14,280 Speaker 1: bit of what is happening to the stock market before that, 6 00:00:14,400 --> 00:00:17,800 Speaker 1: though carrying on the story from yesterday, Boris Johnson's own 7 00:00:18,360 --> 00:00:18,880 Speaker 1: that's right. 8 00:00:19,120 --> 00:00:22,960 Speaker 2: UK Prime Minister Boris Johnson has rejected calls to resign 9 00:00:23,040 --> 00:00:26,360 Speaker 2: after being accused of attending multiple parties and events during 10 00:00:26,440 --> 00:00:29,040 Speaker 2: the lockdown in the UK. If you want the full 11 00:00:29,120 --> 00:00:31,000 Speaker 2: rundown on this story, have a listened to one of 12 00:00:31,000 --> 00:00:33,159 Speaker 2: our episodes this week where we take you through the 13 00:00:33,159 --> 00:00:37,040 Speaker 2: Boris Johnson party saga. While answering questions in Parliament, Johnson 14 00:00:37,120 --> 00:00:39,360 Speaker 2: was asked by the Opposition leader whether he was going 15 00:00:39,400 --> 00:00:42,239 Speaker 2: to resign or not, and he was firm he said no. 16 00:00:43,440 --> 00:00:45,680 Speaker 1: There have been a few developments in the Prince Andrew's 17 00:00:45,760 --> 00:00:48,159 Speaker 1: story and the latest is that he has asked that 18 00:00:48,320 --> 00:00:52,879 Speaker 1: Virginia Jiuffrey's lawsuit against him should be decided by a jury. 19 00:00:53,280 --> 00:00:56,280 Speaker 1: Jufrey claims Prince Andrew sexually abused her when she was 20 00:00:56,360 --> 00:00:59,840 Speaker 1: a teenager. In a formal answer filed yesterday. Prince Andrew 21 00:01:00,040 --> 00:01:05,000 Speaker 1: raised consent and quote unclean hands as defenses against the lawsuit. 22 00:01:05,560 --> 00:01:09,119 Speaker 1: He has, however, previously denied ever meeting or having sex 23 00:01:09,160 --> 00:01:09,759 Speaker 1: with Dufrey. 24 00:01:10,160 --> 00:01:12,160 Speaker 2: In what sounds like a plot of a Netflix movie 25 00:01:12,200 --> 00:01:15,080 Speaker 2: a lot of us watched over summer, experts claim a 26 00:01:15,200 --> 00:01:18,479 Speaker 2: chunk from a SpaceX rocket that had detached and then 27 00:01:18,600 --> 00:01:21,280 Speaker 2: was abandoned seven years ago is going to collide into 28 00:01:21,319 --> 00:01:23,960 Speaker 2: the Moon on the fourth of March. The impact of 29 00:01:24,000 --> 00:01:27,319 Speaker 2: the collision won't actually be visible from Earth, but astronomer 30 00:01:27,400 --> 00:01:31,280 Speaker 2: Jonathan McDowell said that other previous similar instances of space 31 00:01:31,360 --> 00:01:34,080 Speaker 2: junk hitting the Moon and most likely to have actually 32 00:01:34,160 --> 00:01:37,200 Speaker 2: occurred over the years, as many objects have been untracked 33 00:01:37,200 --> 00:01:39,800 Speaker 2: in space for decades. Pretty wild story. 34 00:01:40,440 --> 00:01:43,960 Speaker 1: Today's good news is courtesy of the Australian Open and 35 00:01:43,959 --> 00:01:46,880 Speaker 1: we're in for a treat with an All Australian Men's 36 00:01:46,920 --> 00:01:50,480 Speaker 1: Doubles final to come over the weekend. We're expecting to 37 00:01:50,520 --> 00:01:54,960 Speaker 1: watch Kurios and Kochanakis take on fellow Australians Matt Abden 38 00:01:55,080 --> 00:02:02,880 Speaker 1: and Max Purcell in the final. If you open any 39 00:02:03,040 --> 00:02:05,680 Speaker 1: business section of a new site, you're likely to see 40 00:02:05,840 --> 00:02:08,919 Speaker 1: quite a bit of panic and uncertainty. If you talk 41 00:02:09,000 --> 00:02:12,240 Speaker 1: to any Australian investor, you're sure to find out that 42 00:02:12,240 --> 00:02:14,400 Speaker 1: they haven't had a very good week. This is going 43 00:02:14,440 --> 00:02:16,440 Speaker 1: to stick around in the news cycle for a while. 44 00:02:16,680 --> 00:02:19,240 Speaker 1: So Sam is going to explain to us why the 45 00:02:19,280 --> 00:02:20,639 Speaker 1: bubbles might be bursting. 46 00:02:21,000 --> 00:02:22,840 Speaker 2: Okay, so I'm going to throw a lot of definitions 47 00:02:22,840 --> 00:02:25,960 Speaker 2: into this one, so take it slow, pause, process it all. 48 00:02:26,120 --> 00:02:29,000 Speaker 2: It's worth listening to. First. I want to start at 49 00:02:29,040 --> 00:02:32,920 Speaker 2: what's happened right now the tech sector. So think of 50 00:02:32,960 --> 00:02:36,240 Speaker 2: the big tech giants. They led the US stock markets 51 00:02:36,280 --> 00:02:39,120 Speaker 2: on a pandemic boom last year. There were some massive 52 00:02:39,160 --> 00:02:43,600 Speaker 2: gains and people got very rich. Now markets fear that 53 00:02:43,639 --> 00:02:46,360 Speaker 2: the Federal Reserve, which is the central banking system in 54 00:02:46,400 --> 00:02:49,480 Speaker 2: the US it's similar to the RBA here in Australia, 55 00:02:49,639 --> 00:02:51,960 Speaker 2: will end the era of easy money, and I'm going 56 00:02:52,000 --> 00:02:54,440 Speaker 2: to explain what that means in a minute by raising 57 00:02:54,560 --> 00:02:57,960 Speaker 2: interest rates, all against the backdrop of a potential war 58 00:02:58,040 --> 00:03:01,000 Speaker 2: in Ukraine. Then there's also a high levels of government 59 00:03:01,080 --> 00:03:05,160 Speaker 2: debt resulting from government support programs during the pandemic. There's 60 00:03:05,160 --> 00:03:07,840 Speaker 2: a bit of uncertainty about the omicron variant, and there's 61 00:03:07,880 --> 00:03:11,160 Speaker 2: also issues with the supply chain. Now, I know that's 62 00:03:11,240 --> 00:03:14,240 Speaker 2: a lot to take in, So in short, try and 63 00:03:14,360 --> 00:03:18,400 Speaker 2: just remember this key sentiment. Experts are worried that a 64 00:03:18,480 --> 00:03:21,520 Speaker 2: perfect storm is brewing, and just quickly because I know 65 00:03:21,560 --> 00:03:24,600 Speaker 2: you're still thinking about easy money. Easy money means conditions 66 00:03:24,600 --> 00:03:27,320 Speaker 2: in the market where it's easy to get cash. This 67 00:03:27,440 --> 00:03:29,520 Speaker 2: mostly happens when it's easy for us to get a 68 00:03:29,560 --> 00:03:33,200 Speaker 2: home loan because of low interest rates. So, Sara, some 69 00:03:33,360 --> 00:03:35,840 Speaker 2: experts are warning of a bigger correction to come on 70 00:03:35,880 --> 00:03:38,440 Speaker 2: a scale we haven't seen since the dot Com crash 71 00:03:38,480 --> 00:03:38,960 Speaker 2: of the Just. 72 00:03:39,040 --> 00:03:41,400 Speaker 1: Jump in here because a lot of our audience might 73 00:03:41,400 --> 00:03:44,400 Speaker 1: not have experienced the dot Com collapse firsthand. Can you 74 00:03:44,440 --> 00:03:45,280 Speaker 1: explain what it was? 75 00:03:45,840 --> 00:03:47,880 Speaker 2: So we also know the dot Com crash by the 76 00:03:47,920 --> 00:03:50,680 Speaker 2: bursting of the tech bubble, the Internet bubble. The dot 77 00:03:50,720 --> 00:03:54,320 Speaker 2: com crash was a stock market bubble that popped caused 78 00:03:54,360 --> 00:03:57,800 Speaker 2: by investors pumping money into Internet based startups in the 79 00:03:57,840 --> 00:03:59,520 Speaker 2: early days of the Internet. So I want you to 80 00:03:59,520 --> 00:04:03,839 Speaker 2: think of the oldest looking Internet browser you can possibly imagine. 81 00:04:04,000 --> 00:04:06,080 Speaker 2: There was this massive rush to get into the action 82 00:04:06,240 --> 00:04:08,880 Speaker 2: as this new technology emerged, but when a number of 83 00:04:08,880 --> 00:04:11,880 Speaker 2: companies began to collapse the stock market, which was held 84 00:04:11,960 --> 00:04:15,520 Speaker 2: up by these companies, began to crash. Let's take an example. 85 00:04:15,560 --> 00:04:17,800 Speaker 2: There was a company called pets dot com. They actually 86 00:04:17,839 --> 00:04:20,680 Speaker 2: owned the url pets dot com and they sold pet 87 00:04:20,720 --> 00:04:24,239 Speaker 2: supplies in retail stores. They began operating in November nineteen 88 00:04:24,279 --> 00:04:26,839 Speaker 2: ninety eight. They raised hundreds of millions of dollars on 89 00:04:26,880 --> 00:04:30,320 Speaker 2: the stock market and were totally overvalued and collapsed by 90 00:04:30,360 --> 00:04:33,240 Speaker 2: November two thousand. So the other big event you hear 91 00:04:33,279 --> 00:04:36,360 Speaker 2: a lot about is the Global Financial Crisis. It kind 92 00:04:36,400 --> 00:04:39,680 Speaker 2: of was the next big financial milestone after the dot 93 00:04:39,720 --> 00:04:43,400 Speaker 2: com bubble burst. During the GFC, it wasn't as much 94 00:04:43,480 --> 00:04:46,000 Speaker 2: tech stocks that were to worry, but the housing market 95 00:04:46,320 --> 00:04:49,320 Speaker 2: and a lot of major governments had to support big 96 00:04:49,360 --> 00:04:52,400 Speaker 2: banks as they almost ran out of money. The ones 97 00:04:52,440 --> 00:04:56,000 Speaker 2: that did survive the GFC relied heavily on government support 98 00:04:56,160 --> 00:04:59,080 Speaker 2: to avoid bankruptcy, and millions of people lost their jobs. 99 00:04:59,200 --> 00:05:01,839 Speaker 2: It was the biggest re session actually since the Great Depression. 100 00:05:02,320 --> 00:05:05,640 Speaker 1: So now we find ourselves basically in this situation where 101 00:05:05,680 --> 00:05:08,480 Speaker 1: every day I am opening the paper and I'm reading 102 00:05:08,520 --> 00:05:11,880 Speaker 1: more and more experts comparing the conditions from before the 103 00:05:11,920 --> 00:05:15,560 Speaker 1: dot com bubble and the GFC to today, Sam, I 104 00:05:15,560 --> 00:05:18,240 Speaker 1: know that you're personally quite invested in this. As someone 105 00:05:18,240 --> 00:05:20,480 Speaker 1: that keeps a keen eye on the stock market, what 106 00:05:20,560 --> 00:05:23,400 Speaker 1: type of things do you think these experts are looking 107 00:05:23,440 --> 00:05:25,320 Speaker 1: at when they're making this kind of call. 108 00:05:26,000 --> 00:05:28,919 Speaker 2: They're looking for something called bubbles, and bubbles can occur 109 00:05:28,960 --> 00:05:31,640 Speaker 2: wherever there's hype anywhere. I mean on the sneaker market, 110 00:05:31,640 --> 00:05:34,120 Speaker 2: there's bubbles all the time. And so basically a bubble 111 00:05:34,200 --> 00:05:37,040 Speaker 2: is a situation where the price of something, So it 112 00:05:37,080 --> 00:05:39,200 Speaker 2: could be a house, it could be a stock, it 113 00:05:39,240 --> 00:05:42,679 Speaker 2: could be sorry to mention, this crypto coin is actually 114 00:05:42,800 --> 00:05:47,880 Speaker 2: much higher than the underlying fundamentals can reasonably justify that 115 00:05:47,960 --> 00:05:50,720 Speaker 2: price to be. So let's take it into the world 116 00:05:50,760 --> 00:05:54,919 Speaker 2: of Australian open Let's say that hypothetically ash Bardy is 117 00:05:54,960 --> 00:05:58,719 Speaker 2: set to make the Women's final. Ticket prices might spike 118 00:05:58,839 --> 00:06:01,360 Speaker 2: up to thousand bucks a ticket. But let's say ash 119 00:06:01,440 --> 00:06:04,800 Speaker 2: Party loses the semi final and no longer is in 120 00:06:04,839 --> 00:06:07,320 Speaker 2: the final. Those tickets are going to be resold for 121 00:06:07,400 --> 00:06:10,159 Speaker 2: a much smaller value. You could say then that the 122 00:06:10,200 --> 00:06:14,360 Speaker 2: ticket market for the Women's Grand Slam Final has burst. 123 00:06:14,839 --> 00:06:17,640 Speaker 2: But what's really concerning financial experts at the moment is 124 00:06:17,640 --> 00:06:20,200 Speaker 2: that there's not just one thing that seems to be 125 00:06:20,320 --> 00:06:23,240 Speaker 2: a bubble about to burst. There's quite a few bubbles. 126 00:06:23,240 --> 00:06:26,000 Speaker 2: It's a bit of a bubble bath. Experts say that 127 00:06:26,160 --> 00:06:30,520 Speaker 2: US and Australia are potentially in a superbubble. So in 128 00:06:30,560 --> 00:06:32,679 Speaker 2: the dot com boom, we saw the tech bubble burst. 129 00:06:32,800 --> 00:06:35,200 Speaker 2: In the GFC we saw the housing bubble burst. But 130 00:06:35,240 --> 00:06:37,440 Speaker 2: now there's a bit of tech, there's a bit of housing, 131 00:06:37,680 --> 00:06:40,000 Speaker 2: there's a bit of the price of goods and services, 132 00:06:40,240 --> 00:06:43,839 Speaker 2: and even government debt. But the fundamental thing that's changed 133 00:06:43,839 --> 00:06:47,680 Speaker 2: from last week to today is panic. We're actually getting 134 00:06:47,720 --> 00:06:50,680 Speaker 2: scared and people are starting to sell their stocks. There's 135 00:06:50,720 --> 00:06:54,560 Speaker 2: actually one really renowned expert in the US, Jeremy Grantham, 136 00:06:54,600 --> 00:06:57,560 Speaker 2: who wrote a piece last week announcing that the superbubble 137 00:06:57,640 --> 00:07:00,359 Speaker 2: is going to burst. But he made an interesting point, 138 00:07:00,360 --> 00:07:03,039 Speaker 2: and what he said was that the difference from previous 139 00:07:03,080 --> 00:07:06,320 Speaker 2: bubbles to today is that nature is beginning to fail. 140 00:07:06,640 --> 00:07:08,840 Speaker 2: He said that in the end, if we don't fix nature, 141 00:07:09,040 --> 00:07:10,960 Speaker 2: we're beginning to fail as well. And what he means 142 00:07:11,000 --> 00:07:14,040 Speaker 2: by nature are things like climate change making the cost 143 00:07:14,040 --> 00:07:18,040 Speaker 2: of agricultural goods skyrocket. Hi means things like birth rates 144 00:07:18,080 --> 00:07:22,559 Speaker 2: decreasing and more people entering retirement earlier. It's a really 145 00:07:22,560 --> 00:07:25,760 Speaker 2: interesting situation that none of us have really encountered before. 146 00:07:26,160 --> 00:07:28,600 Speaker 1: It sounds like it's been brewing for a fair bit. 147 00:07:28,800 --> 00:07:30,360 Speaker 1: So what's happened this week? 148 00:07:30,600 --> 00:07:33,160 Speaker 2: So this week the US Federal Reserve, which is the 149 00:07:33,200 --> 00:07:36,520 Speaker 2: equivalent of the IBA in America, issued an update that 150 00:07:36,640 --> 00:07:39,920 Speaker 2: said that they're planning to raise interest rates to curb inflation. 151 00:07:40,080 --> 00:07:42,960 Speaker 2: So we can all expect higher interest rates, which might 152 00:07:43,000 --> 00:07:46,680 Speaker 2: affect things like our mortgages if we have one. Additionally, 153 00:07:46,880 --> 00:07:52,320 Speaker 2: the world's largest tech firms, so think as big as Apple, Google, Microsoft, Netflix, 154 00:07:52,800 --> 00:07:56,080 Speaker 2: they're preparing to issue their latest results to their investors, 155 00:07:56,400 --> 00:07:59,520 Speaker 2: who appear to have grown more skeptical about their prospects. 156 00:07:59,560 --> 00:08:02,040 Speaker 2: Take net Flix for example. Netflix is actually down about 157 00:08:02,040 --> 00:08:05,040 Speaker 2: fifty percent from where it was six months ago. But 158 00:08:05,160 --> 00:08:08,200 Speaker 2: things here in Australia got much worse yesterday when the 159 00:08:08,240 --> 00:08:12,000 Speaker 2: Australian market entered what we call a correction. The official 160 00:08:12,040 --> 00:08:15,000 Speaker 2: definition of a correction is ten percent. It's just a 161 00:08:15,040 --> 00:08:18,640 Speaker 2: ten percent drop in the markets from a recent high. Now, 162 00:08:18,720 --> 00:08:21,320 Speaker 2: a correction doesn't necessarily mean doom and gloom. There's been 163 00:08:21,360 --> 00:08:24,559 Speaker 2: twenty four corrections in Australia since the late seventies, only 164 00:08:24,680 --> 00:08:26,640 Speaker 2: five have resulted in a recession. 165 00:08:27,200 --> 00:08:30,280 Speaker 1: A recession. A recession sounds like a song. 166 00:08:30,440 --> 00:08:33,520 Speaker 2: A recession is a period of economic decline, which is 167 00:08:33,640 --> 00:08:36,960 Speaker 2: two consecutive quarters, so two lots of three months six 168 00:08:37,000 --> 00:08:41,040 Speaker 2: months of negative growth. We actually plunged into a recession 169 00:08:41,080 --> 00:08:44,040 Speaker 2: in mid twenty twenty when everyone was scared of COVID 170 00:08:44,080 --> 00:08:45,839 Speaker 2: and that's when the government stepped in with their job 171 00:08:45,920 --> 00:08:47,360 Speaker 2: keeper and job seeker packages. 172 00:08:48,000 --> 00:08:50,720 Speaker 1: Sounds a bit doom and gloom. Where do we go 173 00:08:50,760 --> 00:08:51,240 Speaker 1: from here? 174 00:08:51,440 --> 00:08:53,280 Speaker 2: It is a bit doom and glooms all right, people 175 00:08:53,320 --> 00:08:54,120 Speaker 2: are freaking out right. 176 00:08:54,280 --> 00:08:54,600 Speaker 1: Thank you. 177 00:08:54,760 --> 00:08:57,000 Speaker 2: I'm sorry to break the news to you, but things 178 00:08:57,040 --> 00:09:00,720 Speaker 2: don't look great. But the multi trillion dollar question here 179 00:09:01,320 --> 00:09:03,760 Speaker 2: is whether or not we're going to see interest rates 180 00:09:03,880 --> 00:09:07,160 Speaker 2: rise as soon as possible, and if they do, what 181 00:09:07,320 --> 00:09:09,720 Speaker 2: the reaction of the stock market is going to be. 182 00:09:10,120 --> 00:09:12,880 Speaker 2: So it's really going to be the chicken or the 183 00:09:12,920 --> 00:09:16,760 Speaker 2: egg situation. Somebody's going to have to panic first, and 184 00:09:16,800 --> 00:09:18,240 Speaker 2: it's not good news for any of us. 185 00:09:19,080 --> 00:09:22,120 Speaker 1: Well, we will leave you on that really high note 186 00:09:22,160 --> 00:09:25,000 Speaker 1: for your Friday, for your weekend, but thank you for 187 00:09:25,040 --> 00:09:27,880 Speaker 1: supporting us. On another week of the Daily OS would 188 00:09:27,920 --> 00:09:30,040 Speaker 1: mean the world for us if you could leave a 189 00:09:30,080 --> 00:09:33,760 Speaker 1: review on Spotify or Apple Podcasts, wherever you are listening 190 00:09:33,800 --> 00:09:36,640 Speaker 1: to us. You can click that little five stars and 191 00:09:36,760 --> 00:09:39,520 Speaker 1: leave a review telling us all your thoughts. We'll see 192 00:09:39,520 --> 00:09:40,080 Speaker 1: you on Monday.