This is what the Flux.
I'm Brett and I'm Justin and it's Wednesday, the nineteenth of February.
Boy, we knew about the proposed match made in the Heavenly Skies between Virgin Australia and Qatar Airways, but this was subject to a Triple C approval, and although the A Triple C hasn't given the all clear one goal just yet, they've again hinted that this deal could be good for consumers and Virgin and Guitar are licking their lips.
European fliers also licking their lips. B Man, fus Man. You have most certainly probably heard about the RBA's cash rate update from yesterday, and if you have, we have it all covered in the Flux out what happened, why it happened, and what you should be doing right now given the RBA's big decisions. Make sure to download the Flux app to check it all out and win it money.
Three impactful stories today, Juzzy boy, let's do it for our first, the Reserve Bank of Australia has cut the cash rate for the first time since twenty twenty.
This is big news for Ossie homeowners and kind of picked the banks as well, be man, So tell me what's going on here.
Well, we know that the rb has been sitting on its hands for a very long time. Yeah, thirteen of the last fourteen meetings have seen eight bars on the cash rates. In fact, the last time we saw a rate cut was in November twenty twenty, back when Wap by Cardi B was the hottest track on the radio.
And the Wap Dance was the hottest and most inappropriate trend on TikTok.
But does wait. With inflation figures trending in the right direction, the RBA has decided to cut the cash rate by zero point two five percent, and.
That means the cash rate is now sitting pretty at four point one percent.
And the big news is that the big four banks all agreed to pass on the cash rate to their customers.
Watching the BN man Michelle Bullock, who's the RBA governor, wants Ozzie to cool their jets.
Yep, she reckons the cash rate was a line ball decision, so don't go expecting big cuts over the next few months. What is the key learning here?
The RBA is walking a financial tightrope and one wrong step can cause inflation chaos all over again.
On the one hand, the RBA wants to provide financial relief to borrow is by cutting the cash rate.
On the other hand, it needs to ensure the stability of the Australian economy.
Largely by ensuring inflation remains in Chair and b Man.
While the inflation number is trending in the right way, there are still a number of concerning factors. We've got a tight labor market, We've seen retail spending increase for the first time in two years. There is uncertainty around Donnie T's tariffs as well or which could lead to higher inflation.
So jazzy boy. This is why the RBA governor expressed pretty directly that we are unlikely to see another cut soon.
But be man, that ain't stopping the big four banks from predicting more rate cuts in the future.
That is true. A and Z reckons will see one more this year. CommBank reckons we'll see two more rate cuts this year. And NAB and Westback are excited. They reckon we'll see three more rate cuts this year.
In total, down a whole one percent.
For our second story, Bendigo and Adelaide Bank has seen at share price drop by more than fifteen percent if you don't mind. And that's just for this week after it ran out of cheap money invests.
Unanngry be Man. They're just disappointed and let me tell you that stings a lot more so tell me what happened here.
Well a bit of boutground. Bendigo and Adelaide Bank is the sixth biggest bank in Australia based on market value, and Bendio Bank has.
Been around the bush literally.
Yeah, it's been around since eighteen fifty eight and specialized in being the biggest quote community bank as it calls itself. Now b Man Bendigo Bank merge with Adelaide Bank in two thousand and seven when it became Bendigo and Adelaide Bank. It's quite huge and it also happens to be the owner of UP after fully acquiring UP in twenty twenty one.
But now be Man Bendigo and Adelaide Bank has announced that its deposits group over five percent in the last half. That's good. It's residential lending also increased over five percent in the last half.
Very good.
But before you're too excited, Bendigo and Adelaide Bank, so it's net interest margin dropped by point six percent.
Wow. So what does this all mean, Juzzi boy.
Well, it received too much demand for loans, which meant it needed to use expensive wholesale funding.
But investors were not happy with this and its share price dropped by more than fifteen percent.
So what is the key learning here?
Too much demand for loan is a bad thing when you don't have enough cheap money lying around.
You see, b Man banks typically fund their home loans in two ways.
Firstly, they fund it through deposits from their retail customers.
For example, when you put money in a savings account, the bank will lend a portion of your funds to someone.
Else and does it wait. Retail deposits are generally the best source of funding.
The bank may give you four percent interest and lend out your money at six percent.
The other way that banks fund their home loans is through wholesale funding.
That's money borrow from big investors, from superfunds and other financial institution.
Which is often more expensive for a bank.
So when banks don't have enough retail deposits to fund loans, they have to turn to wholesale funding.
Now, for Bendigo, this became a problem because loan demand grew beyond what its deposits could handle.
Which meant they had to rely on wholesale funding, which increased its costs.
And squeezed margins.
And next minute, it's cash profits fell ten percent lower than the previous half out for our third.
And final story, The New York Times has given the all clear one goal for its staff to use AI tools to write social copy and even editorial ideas.
Interesting update from The New York Times. B Man never one eighty. I'm sniffing around, so tell me more.
Well. The New York Times is an American daily newspaper that was founded in eighteen fifty one, and since then it's become the most read newspaper in the whole world, with more than eleven million subscribers. We'd be talking latest news, opinion pieces, games, Hello wordle podka, Hello the Daily Now does it wait?
Back?
In December twenty twenty three, The New York Times sued open ai and Microsoft for copyright infringement.
They claimed that open ai was using its stories to train its chatbots, and it.
Was stealing billions of dollars worth of work that was done by hard working journalists.
And this is a major lawsuit taking a stand for traditional media.
But now the same New York Times has given its editors and staff the all clear to use its new AI tool named Echo.
They're allowed to use this AI tool to develop editorial ideas, brainstorm interview questions, or even help with research. So what is the key learning here?
If you can't beat them, sue them and then join them.
Media companies are stuck in a love hate relationship with AI yep.
On the one hand, from a business perspective, they understand the value of AI.
It can help with ideation of articles, research, even summarizing long end the jazz Boy.
On the other hand, the New York Times has built its empire on quality and integrity.
So I've got a question for you, b Man, How does The New York Times maintain that while giving AI a key to the news room.
Well, having thought about that Jazzy Boy, we know that a number of other media outlets have already made deals with AI companies. For example, NewsCorp has encouraged its staff to use AI and even has AI journalist producing more than three thousand articles a week wow in its local papers. So b Man, time will tell whether the New York times will lean further into AI while also sewing open AI for everything they've got flex am. If you're a homeowner app, you might be very excited.
By the RBA's cash right cast, but what does it actually mean for you and what should you be doing right now? Well, in the Flux app, we've got a whole list of things you should be looking at right now if you want to capitalize on the ray casts. So make sure to check out the Flex app to learn some of the steps that homeowners can take during a raate cut.
Thanks for listening, and we'll see you on Friday.