Today’s News

The Big Picture

• Australia nears new trade deal with EU. Trade Don Farrell is in Brussels to close a major trade deal that has come down to the wire, now depending on a pivotal meat quota negotiation. The EU is Australia’s third largest trading partner, with two-way trade of nearly $110 billion in the past year. (Capital Brief)
  
  

• Rental affordability hits record low. Tenants now spend an average of 33% of their pre-tax income on rent, according to Cotality. National rents have outpaced wages by 250% in the past five years. (ABC)
  
  

• US consumer spending drops in tariff-exposed industries. Consumer spending was up 2.4% year-on-year in December, down from 3.3% in November. Furniture and clothing retailer sales, which are heavily impacted by tariffs, were down 0.9% and 0.7% month-on-month. (BBC)
  
  

• Latest victim of AI fear: Brokerage stocks. Charles Schwab, Morgan Stanley, and Raymond James shares fell 7%, 2%, and 9% respectively on Tuesday after fintech Altruist announced a new AI-powered tax planning feature. This follows similar selloffs in legal, advertising and analytics stocks as investors worry about the potential for disruption from AI. (FT)
  
  

• Carmakers pivot battery plants to AI. Slumping electric vehicle sales and soaring electricity demand from AI has led Ford, Stellantis, and GM to retool EV battery factories to produce grid-scale batteries, highlighting a shifting use case and ongoing demand for battery minerals like lithium and rare earths. (FT)
  

Companies in the news

• Commonwealth Bank soars but Macquarie looms. CBA stock had its best day since 2000, up 7%, after reporting profit up 6% to a record $5.4 billion profit for the half. However, CEO Matt Comyn noted the competitive threat of Macquarie’s low-cost model and sharper pricing, acknowledging its unprecedented gains over the past 5 years. (AFR)
  
  

• CEOs out at ASX and CSL. ASX’s Helen Lofthouse and CSL’s Paul McKenzie are out as CEO as both companies struggle. The ASX has faced heavily regulatory scrutiny over various outages, and CSL stock fell 39% in 2025 on poor earnings. McKenzie’s departure came one day before CSL reported an 81% fall in profit. (Capital Brief | AFR | CNBC)
  
  

• Evolution doubles profit on surging gold price. The Australian gold miner reported a 110% increase in first-half profits, sending the stock up 9% yesterday and up 162% in the past 12 months. (Capital Brief)
  
  

• Exodus out of xAI. A second co-founder of Elon Musk’s AI firm has left within two days, bringing the total to six of 11 co-founders leaving xAI. This comes days after an acquisition by SpaceX, another Musk company, and as xAI faces investigations across Europe and Asia for producing sexualised AI-generated content on Twitter(X). (CNBC)
  
  

• AGL profit nearly halves, yet shares rally. Despite reporting a 42% decrease in profits for the past 6 months, AGL still rose 12%. Why? Expectations were so low investors thought the numbers would be even worse. (Capital Brief)
  
  

• Paramount isn’t giving up on Warner Bros. The Hollywood giant’s latest offer sweetens its $78 billion all-cash offer by offering to pay Warner’s $2.8bn break fee for its deal with Netflix and an extra $650 million per quarter until the deal with Paramount closes. Warner Bros. shareholders are unlike to be swayed after 93% of them voted to reject Paramount’s offer. (CNN)
  
  

• US earnings season hit hard by tariffs. Ford’s 2025 tariff costs came in at $2 billion, nearly double what it had planned. Newell Brands and Harley Davidson announced $130 million and $67 million tariff hits, respectively, while Ralph Lauren similarly said Q4 profit margins would shrink by over 1% due to tariffs. (WSJ | Reuters | Reuters)

What the…?

The Almighty Index. The Vatican Bank is partnering with Morningstar to provide two Catholic principle-based equity indexes in the US and Eurozone. These indexes follow between 50 and 100 medium- and large-cap companies that align with the principles of the Vatican’s Institute for the Works of Religion.

Names like Meta and Amazon feature in the US index, while ASML and Deutsche Telekom headline the Eurozone index. This is not the first Catholic-aimed index, as S&P Dow Jones Indices launched the S&P 500 Catholic Values Index a decade ago. (CBS)

Today’s Insight

Essentials: The Fundamentals of Good Investing

This is an excerpt from the Essentials Series, where we covered investing basics. (Spotify | Apple | YouTube)

Ren: Rule number one, always think long-term.

Bryce: So Ren, I love this rule and it is summed up nicely by Morgan Hausel, one of our favourite authors. He's written The Psychology of Money, and he says that the biggest determinant of your future wealth is your savings rate. It's not about the salary that you earn. It's not about the investments that you're investing in. It's really about how much you can save and put it to work in the stock market.

Let's use a worked example to illustrate that point. Let's say $20 a week invested for 35 years at 13%. And a reminder that 13% a year is the average of the past 124 years of the Australian All Ordinaries Index with dividends reinvested.

So 20 bucks a week, 35 years at 13% a year is $570,000. If you bump that up to $50 a week, you have $1.4 million. Now to get that same result continuing to invest $20 a week, you would need to go to 17% per annum, which is not many investors are getting that consistently. That's getting close to Warren Buffet numbers, or you would need to extend your time horizon from 35 years to 43 years.

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Today in Equity Mates