Here’s what you need to know today

• It was a big weekend for elections: In Britain the Labour Party won a resounding victory and Keir Starmer is the new British Prime Minister, in France the second round of the Parliamentary election took place on Sunday with votes coming in Monday morning Australian time, and in the US Joe Biden sat for a prime time interview and insisted he is staying in the race even as reports are 168 Democratic donors signed a letter urging him to step aside
  
  
  

• The latest economic data out of the US showed unemployment rising to 4.1% and wage growth slowing. But in the strange world of economics where bad news can be good news, the silver lining is this makes an interest rate cut in the US even more likely.
  
  

• More information on OpenAI’s data breach have emerged. While it appears that hackers only were able to access an employee discussion board, it is a reminder of the security vulnerabilities as more and more organisations adopt AI.
  
  

• China and the EU’s trade dispute is deepening. Last week, the EU slapped tariffs on Chinese electric vehicles as they benefit from state subsidies. In retaliation, China said it will investigate the EU’s brandy exports. Chinese state media also suggested investigations into European dairy and petrol cars.
  
  

• The rise and rise of Chinese ecommerce giants Shein and Temu continues. The latest sign? The CEO of DHL Global Forwarding noted that Shein and Temu orders are swamping their planes and taking up more than 30% of cargo space on some routes. Usually items that get shipped by air rather than sea are high value items like phones or perishable items like food, not the latest Shein haul.
  

What the…?

In more election news, in Japan the race to become Tokyo’s next Governor has taken on a comical tone. 56 candidates are racing including ‘AI Mayor’ who is represented in campaign posters as a metallic humanoid and another candidate is running using photos of their pet dog.

Our favourite? The candidate representing the golf party who discusses policies while practicing his golf swing.

Investing is a lifelong journey

Here’s what you can learn today.

On a recent Equity Mates podcast, we asked:
What are the hallmarks of an innovative growth company?

We put that question to Roger Montgomery, the founder and Chief Investment Officer of Montgomery Investment Management:

Hallmarks of an innovative growth company include:

• High Margins and Returns on Equity: These companies achieve superior financial performance through high gross and EBITDA margins, indicating strong pricing power and efficient operations.

• Manageable Debt Levels: While some debt is acceptable, innovative growth companies typically maintain manageable levels of debt to avoid over-leverage and financial strain.

• Growth Potential: These companies are often in sectors with strong secular growth trends, such as technology, healthcare, and green energy, allowing them to capitalise on rising demand.

• Scalable Business Models: They possess business models that can be scaled efficiently, bolting on revenue at a rapid pace while controlling costs.

• Market Leadership: Often, these companies hold a leadership position in their niche, with strong brand recognition and customer loyalty.

Some examples Roger shared with us:

• Macquarie Technology Group: Benefits from the rising demand for cloud computing and AI, supported by high margins and expanding capacity.

• Megaport: Leverages its leading technology in cloud interconnection, enabling seamless global connectivity for enterprises.

• Lovisa: Scalable business model with rapid international store rollouts, targeting a resilient consumer segment.

• ARB Corporation: Strong brand and expansion into OEM deals, enhancing its revenue growth through strategic partnerships.

Watch the full episode on YouTube:

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