The Big Picture
Australia's debt to hit 56% of GDP if productivity stays weak. The Treasury's Intergenerational Report, a 40-year outlook for the future of the Australian economy, warned of an Australia in 2066 that is bigger, older and costlier to run, with health and aged care the biggest budget pressures. On its gloomier scenario, where productivity grows just 0.8% a year rather than the assumed 1.2%, gross debt would climb to 55.9% of GDP compared to 33.1% today. (AFR)
All four big banks now tip a rate hike next week. CBA and ANZ both brought forward their forecasts for an interest rate rise at the RBA's September meeting, joining Westpac and NAB, with the market pricing the chance of a hike at 90%. ANZ went even further, tipping a second hike in November that would lift the cash rate to 4.85%, its highest since 2008. (ABC)
US proposes AI safety notification system with China. Washington has floated a mechanism for the two countries to warn each other about serious AI threats, with Treasury Secretary Scott Bessent arguing greater transparency between the world's top two AI powers is crucial. The proposal came out of roughly eight hours of talks in New York yesterday, held to lay the groundwork for a Trump-Xi summit in Washington later this week. (Al Jazeera)
Ukraine strikes hit Russian oil output, driving fuel shortages. Ukraine launched more than 1,000 drones at Russia over the weekend, hitting a major Moscow refinery in a campaign that has knocked out much of the country's refining capacity. The strikes have triggered fuel shortages, price rises and long petrol queues across Russia, with President Zelenskyy calling the targets facilities worth "billions of dollars that sustain the war machine". (ABC)
Albanese launches bid for UN Security Council seat. The prime minister has formally put Australia forward for a two-year term on the council in 2029 and 2030, arguing that a seat would help ordinary Australians by shaping global issues tied to inflation and the cost of living. Only Australia and Finland have entered the race for the two available spots, though Australia would still need backing from two-thirds of the UN's 193 members even if unopposed. (The Guardian)
German leader Merz vows to stay after "disaster" losses. Chancellor Friedrich Merz's Christian Democrats crashed to 4.9% in a north-eastern state, their worst postwar state result, as the far-right AfD doubled its vote to top the poll. Merz, battling record unpopularity, blamed his economic reforms and vowed to press on. (FT)
Companies in the news
Perpetual shares dive as EQT takeover collapses. The wealth manager's shares tumbled nearly 14% yesterday after its board rejected a revised $2.6 billion takeover bid from Swedish private equity giant EQT, ending months of talks. With EQT declaring it a best and final proposal, one analyst said any deal now looked "dead and buried". (AFR)
Fresh blow for Canva as enterprise data exposed in breach. The design platform, whose backers cut its valuation by 17% last month over soaring AI costs, has suffered another setback after an unauthorised party accessed confidential details for some enterprise customers. Canva says it cut off the access and notified those affected, stressing its own platform and designs were not compromised. (Capital Brief)
Nike's woes deepen as Mbappé defects to rival On. The football star, a Nike athlete since joining as a child in 2006, has signed with Swiss brand On after Nike declined to renew his deal. It is a coup for On as it pushes beyond running, and another blow for Nike, whose shares have halved this year amid weak sales and trouble in China. (CNBC)
Telix buys Germany's ITM in $3.3b nuclear medicine deal. The Australian radiopharmaceutical firm buy the German group to secure a supply chain spanning 65 countries for the fast-decaying radioisotopes used to detect and treat cancer. The deal roughly quadruples Telix's reach and lifts combined annual revenue to about US$1.3 billion, though shares fell 11% on the news. (AFR)
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Firmus accused of ‘sportwashing’ in Tasmania
The AI infrastructure company, which has three AI factories planned for the Tasmania, has signed as principal community partnership deal with the Tasmania JackJumpers and Tasmania Jewels, days after locking in OpenAI as an anchor customer.
Firmus says the deal backs grassroots sport and reflects where its staff wanted to contribute, but some fans are unimpressed, with one asking on the JackJumpers' Instagram whether members could get refunds after announcing the relationship with a "controversial company". (Capital Brief)
The One ETF Both Experts Agreed On
Daniel Kelly from Viola Private Wealth and Andrew Wiedlandt from DP Wealth Advisory put the 10 most requested ETFs from the Equity Mates community under the microscope on a recent episode of Buy or Sell. (Spotify | Apple | YouTube)
Out of the 10 ETFs analysed, the two experts disagreed on almost everything. Cybersecurity, semiconductors, the NASDAQ, Asian tech. However Copper was the exception.
The bull case for the Global X Copper Miners ETF, (ASX: WIRE), comes down to a supply and demand mismatch. It takes around 17 years to bring a new copper mine into production. But demand for copper is skyrocketting from data centres, EVs, electrification and AI infrastructure.
Dan Kelly believes we are going to need to move a lot of electrons in the future, and copper is the key input to almost all of it. Data centres, EVs, autonomous robotics.
Through copper exposure he also doesn’t think it matters who wins the AI race. Whether Anthropic or OpenAI comes out on top, both are going to be using enormous amounts of copper in their products and services.
Andrew Wiedlandt added the geopolitical angle as Australia has very few ways to access pure play copper exposure locally. BHP and Sandfire are about it. An ETF like WIRE, or the alternative he flagged, CPPR from ETF Securities with a slightly lower management fee and more concentrated exposure, gives investors global access to the thematic.
