Here’s what you need to know today

• The Aussie share market keeps breaking records. One day after a reasonable inflation number quelled fears of another interest rate rise next week, the ASX 200 crossed 8,100 and reached heights it has never seen before. 
  
  

• The Rex fallout continues. Australia’s third-largest airline has stood down 350 workers and told employees it is unable to pay wages due to its “very perilous financial position”.
  
  

• CoreLogic released their data on Aussie house prices for July. While the national average property price rose 0.5% (the 18th consecutive monthly increase), prices fell in Melbourne, Hobart and Darwin. In Sydney, prices rose 1.1% for the quarter, compared to 5% growth for the same quarter last year.
  
  

• The US Federal Reserve held interest rates steady at 5.25% to 5.5%. This was expected, but all signs continue to point to a rate cut in September as inflation cools and the job market slows.
  
  

• More signs that the lithium bubble has popped, as the world’s largest lithium producer, Albemarle, announced it will cut 300 jobs in Australia and shut half of its Western Australian processing facility. Not deterred, Australian mining giant Rio Tinto has said it wants to expand its lithium division.
  
  

• The costs of the CrowdStrike outage continue to be tallied. One American airline, Delta, spent $500 million to deal with the outage in extra wages for workers and to lodge stranded passengers.
  
  

• Ticketing website StubHub has been sued for one of the most annoying pricing tactics - Drip Pricing - where a website shows one price then slowly adds more fees and charges throughout the checkout process. The lawsuit claims it was pushing prices by up to 40%.

What the…?

There is a stereotype of under-socialised men living in their parent’s basement choosing AI relationships over real human interaction. Turns out, it may be the other way around. Axios reports a growing number of women are choosing AI companions over the human alternative. Platforms like Nomi and Replika are leading the boom in ‘companion apps’.

Investing is a lifelong journey

Here’s what you can learn today.

This is an excerpt from our podcast interview with Roger Montgomery, Chief Investment Officer at Montgomery Investment Management

Question: You mentioned the significance of small caps and private credit in the current market. Why do you find these asset classes particularly attractive right now?

Small caps are particularly attractive because they have significantly underperformed large caps, creating a valuation gap that offers potential for high returns as the market environment stabilises and risk appetite increases. Many small-cap companies are innovative and capable of high growth rates, especially when they operate in sectors with strong tailwinds like technology and healthcare. As investors gain confidence in the benign macroeconomic backdrop, I anticipate a rotation into these undervalued smaller companies, driving their outperformance.

Regarding private credit, the asset class is becoming increasingly appealing due to the higher interest rates, which translate to more attractive yields. With banks pulling back from lending to small and medium enterprises due to regulatory changes post-GFC, non-bank lenders are stepping in to fill this gap. Private credit funds can offer high returns, around 9-11% per annum, with relatively low volatility and regular monthly income, making them an excellent choice for income-focused investors. Given the evolving dynamics, private credit is likely to become a recognised asset class in portfolios, offering diversification benefits and attractive income streams.

Agree with Roger’s take? Want to hear more? Listen to the full interview wherever you listen to podcasts or watch on YouTube:

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Join Sammy Gordon, regular Equity Mates property expert, in the studio with his co-host Jimmy Ibrahim and special guest APS Property Economist Luke Teeuwsen as they unpack the reasons so many investors get stuck at 1 or 2 properties!

Listen in to this episode to make sure you pre-empt all the usual suspect traps the trio see regularly through investors journeys They may have been a little guilty of several of these mistakes themselves.

Level up your property investing IQ by listening to this episode of the Scouting Australia Podcast on your favourite listening platform. 

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