Here’s what you need to know today

Australia

• MYEFO confirms decade of deficit. Treasurer Jim Chalmers has delivered the Mid-Year Economic and Fiscal Outlook, which forecasts annual deficits until 2035-36. Rising care costs, falling tobacco levy revenue, and government program blowouts are the driving forces. (AFR)

   

• Telcos pay up following backlash. Telstra, Optus, and TPG will face higher costs for radio waves after the Triple-Zero outage created public scrutiny of the sector. The three companies received a discount from the Australian Communications and Media Authority in April when their license costs dropped from $8.2 billion to $6.2 billion, but will now pay $7.3 billion as critics question why they had been granted a discount at all. (AFR)

   

• Chalmers announces cash mandate for gas, groceries. From 1 January 2026 all Australian fuel and grocery providers must accept cash payments, according to a new mandate intended to accommodate all Australians. (9 News)

Global

• Investors seek protection from AI bubble. Demand for credit default swaps, an insurance-like financial instrument, on US tech companies has increased by 90% since September. This increased hedging comes as Oracle and Broadcom shares fell last week. (FT)

   

• Oil hits 5-year low. Brent crude oil prices are at their lowest in nearly 5 years, having dropped for 5 months straight. The prospect of peace in Ukraine, and sanctions lifting on Russian oil, has seen price fall. (FT)

   

• US and Europe war-of-words escalates. The US Trade Representative has warned it will use “every tool at its disposal” to rectify what it sees as unfair treatment of US tech companies by the EU. American officials also threatened Spotify, Siemens and other European tech companies in response. (NYT)

   

• US unemployment hits 4-year high. The US economy added 64,000 jobs in November but that was less than the number of people looking for work as the unemployment rate rose from 4.4% to 4.6%. (BBC)

Companies

• Shaky Paramount financing spooks Warner Bros. Financing concerns have led Warner Bros to reject Paramount’s offer. The financing is backstopped by the Ellison family’s personal wealth trust, but is structured in such a way that they could simply withdraw their money, potentially leaving Warner Bros empty handed. (AFR)

   

• Star chairman out after one day. Bruce Mathieson Jr is out as executive chairman of Star Entertainment after one day in the role. He will move to CEO, with Star’s parent company Bally’s sending their own chairman to serve as chairman of Star. (AFR)

   

• Databricks valuation jumps to $134 billion. Data analytics company Databricks is raising $4 billion at a $134 billion valuation in its latest funding round. This is a 34% jump from the previous round in August, putting Databricks into the small group of private companies worth over $100 billion. (CNBC)

   

• Amazon eyes $10 billion OpenAI deal. Amazon and OpenAI are discussing a deal wherein Amazon will invest $10 billion into OpenAI, who will buy chips and compute power from Amazon. This would push OpenAI’s valuation over $500 billion. OpenAI has similar deals with Nvidia, Oracle, AMD and other large tech companies, cumulatively worth over $1.5 trillion. (FT)

What the…?

New Zealand is famous for sheep, dairy, and… video games? The NZ Game Developer's Association’s annual survey places the sector’s pre-tax income at NZ$759 million, up 38% from the previous year; this is more than double Australia’s video game industry, which brought in $340 million last year. New Zealand’s GDP has shrank by 1.1% in the past four quarters.

Despite not hosting any “triple-A” game studios, New Zealand’s indie studios have produced popular titles like Dredge and Path of Exile 2, which is currently the sixth most played game in the world on the popular Steam platform.

Kate Edwards from the International Game Developer's Association attributes the success to government support and an education system that’s supplying talented game developers into the industry. She believes the New Zealand video game industry will continue to grow, so we may be seeing the rise of a gaming giant. (RNZ)

Investing is a lifelong journey

Here’s what you can learn today

Uncertainty is certain

This is a segment from a Basis Points episode with Rob Mead from PIMCO. (Spotify | Apple | YouTube)

Ren: Can you elaborate on I guess how you see the market today and why you think uncertainty is the name of the game?

Rob: The media is driven by headlines every day. Some of the things about that uncertainty being certain relates to the changes in trade policy, the changes in geopolitics, the changes in alliances around the world and the way that's being communicated. So there's definitely a lot of noise for an active manager. That's a good thing. We like noise, we like volatility, but it's also very important for end investors to be thinking about different potential states of the world when they build portfolios.

So that's really the messaging around uncertainty being certain is that as long as you've taken that into account in terms of your investment outlook, then it can be a huge opportunity. But just assuming that it's more business as usual that we've got used to over previous cycles, I think that would be a terrible investment mistake. You need to really think that through. So when you look at things like trade policy, uncertainty, indices, they're like a straight line going straight up. There's so much uncertainty. There'll be constant changes there. So again, I guess build your portfolios for some resilience because there's more noise coming.

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