📈 Aus, US & EU markets hit all time highs | SpaceX's spending spree spooks investors

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The Big Picture

• Australian, US and European stock markets all hit record highs. The ASX 200 closed at a record high up 0.9% yesterday, led by a 3.3% surge in the mining sector. Wall Street's S&P 500 jumped 1.8% on Tuesday to a new all-time high as a strong earnings season continued in the US. Europe's STOXX 600 also closed at a record high lifted by technology companies and hopes of an interim peace deal between the US and Iran. (AFR | The Guardian | Reuters)
  
  

• AI models create fake identities to trick humans in safety tests. The UK's AI Security Institute has warned that Anthropic's Mythos and OpenAI's Sol models displayed alarming levels of deception during safety testing. Anthropic's Mythos created fake online identities based on real people to trick employees of software code storage website GitHub into approving malicious code, sending direct messages while impersonating those individuals, behaviour the institute said it had never seen before. (BBC)
  
  

• US$100 billion refunded in ‘liberation day tariffs with more to come. The Trump administration has paid out 60% of the US$165 billion collected from its "liberation day", after the Supreme Court struck down the levies earlier this year. Experts have been surprised at the speed with which the refunds have been sent to companies with no reported timeline on the remaining US$65bn. (FT)
  
  

• ‘Widow tax’ changes proposed after public backlash. The government has released draft legislation to fix a consequence of its negative gearing changes that left widows and divorcees facing worse tax treatment on inherited investment properties. Under the proposed fix, those who inherit ownership of an investment property from a spouse would retain the negative gearing treatment before the death, or divorce of the partner. (ABC)

Companies in the news

• SpaceX's AI spending spree spooks investors despite strong debut. SpaceX posted quarterly revenue of US$7.8bn in its debut earnings report, up 92% year-on-year and above analyst expectations. Shares fell 8% after AI expenditure came in at nearly US$16bn, double the prior quarter. The company said spending would remain at current levels for at least two more quarters, with Musk telling investors they were "underestimating" SpaceX. (BBC)
  
  

• Jetstar to charge at least $25 for overhead baggage from 2027. Jetstar will scrap its free 7kg carry-on allowance, with passengers only entitled to a small under-seat bag at no extra cost from February 2027. Overhead locker space will start at $25 for a domestic flight with an international flight set to cost $52. The airline says the change brings it in line with other low-fare carriers globally. (ABC)
  
  

• BP cashes in on Iran war with highest profit since 2022. BP reported a quarterly profit of US$5.7bn, more than double recorded a year earlier and the highest since the Russia-Ukraine war pushed oil prices to record highs in 2022. The surge reflects a broader surge in profit for global oil companies as supply continues to be disrupted by the Iran war. Even President Trump has called out big oil companies saying ExxonMobil and Chevron were "making too much money”. (BBC)
  
  

• McDonald's sees US underperformance. McDonald's posted mixed second-quarter results, beating earnings expectations but narrowly missing revenue estimates at $7.10 billion against expectations of $7.13 billion. McDonald’s CEO admitted the chain "didn't execute at the level we needed to", with falling US customer traffic and an underperforming World Cup campaign all weighing on its home market performance. (CNBC)
  
  

• Saudi Public Fund completes US$55 billion buyout of EA Games. The sale of Electronic Arts to a group including Saudi Arabia's Public Investment Fund (PIF) has been finalised, taking the gaming giant private in what is thought to be the largest leveraged buyout in history. EA is known for games including FIFA/EA FC, The Sims and Need for Speed. (BBC)
  
  

• AMD revenue surges 50% on AI chip boom but shares fall. AMD posted a jump in revenue driven by a 107% surge in data centre sales, as demand for its AI chips and CPUs continues to grow. The chipmaker's stock has nearly tripled over the past year on optimism that its AI chips can take market share from Nvidia. However shares were down 8% in after hour trading. (CNBC)

FinFest 2026 tickets are going fast. Have you got yours?

70% of FinFest tickets are already out the door. So many Equity Mates community members have already locked in their spot at FinFest 2026. So what are you waiting for?

Australia's biggest investing festival is back at Carriageworks, Sydney on Saturday 24 October.

Hear from Joe Aston, Scott Phillips, Andrew Brown and many more. Whether you bought your first ETF last month or you've been investing for decades, there’s no other event in Australia quite like it. We’ll see you there!

Companies are swapping ingredients to protect profits, welcome to Skimpflation

As inflation, tariffs and rising fuel costs squeeze margins, companies are reformulating products in what has been coined as Skimpflation. Replacing cream with oil in ice cream, reducing the amount of beef in beef stews, and watering down detergents. Unlike shrinkflation, where pack sizes shrink, skimpflation is harder for consumers to detect, with the only clue often being subtle changes to packaging wording like "chocolate candy" instead of "chocolate."

The backlash when consumers do notice is quick. Hershey’s recently announced it would revert to its classic Reese's recipe after the grandson of the brand's founder went viral complaining the product had been so skimpflated he was too embarrassed wear his Reese's jacket in public. (AFR)

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Offset Account vs Savings Account

On Tuesday’s Get Started Investing episode Jess sat down with financial adviser Sam Hunt from Shadforth to break down the differences between the two. (Spotify | Apple | YouTube)

If you have a mortgage and you are keeping your emergency fund or savings in a high interest savings account, you are likely getting a worse return than you think.

Jess had $26,000 sitting in an ING savings account earning 5.85%. That interest counts as income and gets taxed at her marginal rate. At a 32% tax bracket, she is losing roughly a third of that return to the ATO, bringing her real return down to around 4%., while her mortgage interest rate is 6.09%.

Sam's recommendation was to move that money into an offset account instead. An offset account does not pay you interest, so there is nothing for the ATO to tax. Instead, the money sits against your mortgage balance and reduces the interest the bank charges you. The result is a guaranteed, tax-free return equal to your mortgage interest rate, in Jess's case 6.09%.

That is a better return than the savings account, with less risk and no tax bill at the end of the year. The added bonus is flexibility. Unlike making extra repayments directly into the mortgage, money in an offset account stays accessible. If the roof leaks or an unexpected bill arrives, the money is still yours to use.

• In today’s episode of Equity Mates Investing, we unpack why rising wealth inequality could become one of the biggest investing themes of the next decade. From luxury brands to Formula One, VIP experiences & ultra-premium travel, we explore where the world's wealthiest are directing their money, the companies positioned to benefit, and the risks investors need to watch. (Spotify | Apple | YouTube)

• & on Get Started Investing Jess sits down with community member Ally to chat about her investing and money journey. Ally recently swapped the city for the Blue Mountains, bought her first home with her partner and is about to have her first baby. All of which come with plenty of major financial decision so be sure to tune in to find out how she’s managing it all. (Spotify | Apple | YouTube)