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Here’s what you need to know today

• Australia’s trimmed mean inflation, the Reserve Bank’s preferred measure of inflation, has dropped back into its target range for the first time in 3 years. Trimmed mean inflation came in at 2.9% for the 12 months to March as headline inflation came in at 2.4%. Australia’s Reserve Bank has an inflation target of between 2-3%. (AFR)
  
  

• This good inflation news makes an interest rate cut all-but-certain at the Reserve Bank’s next meeting in May. Markets are pricing in a 98% chance of a 25 basis point rate cut.
  
  

• Credit rating agency S&P Global has warned that spending promises from both major parties this election could risk Australia’s AAA credit rating. Both leaders deflected when asked about the news, with Anthony Albanese arguing Labor has improved the budget bottom line by $207 billion while Peter Dutton claimed the Coalition are more effective economic managers than Labor. (Capital Brief)
  
  

• Amazon drew the ire of the Trump Administration after reports emerged it would list tariff-related price hikes as a separate line item on customer’s receipts. President Trump said he called Jeff Bezos and the company later came out and said it wasn’t true. (AP News)
  
  

• Earnings season in America will reach a crescendo this week as Meta, Microsoft, Apple and Amazon all report earnings in the next two days. Together these 4 companies are worth more than $9 trillion and make up nearly 20% of the S&P 500. Where their fortunes go, so will the rest of the American stock market.
  
  

• While we wait for these tech giants to report, the stock market keeps ticking up. America’s S&P 500 has enjoyed six days of gains in a row and is now just down 2% from when Trump announced his ‘Liberation Day’ tariffs.
  
  

• China’s Foreign Ministry has escalated its war-of-words with the US, releasing a video vowing it would “never kneel down” to American bullying and calling America a “paper tiger”. It warned other nations considering negotiating with Trump that “bowing to a bully is like drinking poison to quench thirst”. (Wall Street Journal)
  
  

• Almost 40 companies have lowered their profit guidance or pulled their forecasts all together citing uncertainty from tariffs. For example, Porsche has lowered its profit forecast by 100 million Euros while GM and Volvo ditched their guidance all together. It’s not just car makers, businesses as varied as Swedish appliance maker Electrolux to American food giant Kraft Heinz are all cutting guidance. (Reuters)
  
  

• One unlikely hero of the trade war? Coca-Cola. As the beverage giant reported its first quarter earnings it confirmed it would not be raising prices despite acknowledging that tariffs on aluminium was driving up costs of cans. (Yahoo Finance)
  
  

• Spotify’s quarterly results disappointed investors and shares were down 3%. Gross margin and monthly active users were slightly below analyst expectations despite paid users still rising 12% to 268 million. (Bloomberg)

What the…?

Mark Zuckerberg and his wife Priscilla Chan are closing down the school they opened in 2016. Named The Primary School, it offered fee-free education to disadvantaged communities in the San Francisco bay area.

No reason has been given for the closure, but the announcement comes as Zuckerberg aligns himself with President Trump’s anti-DEI stance and the Chan-Zuckerberg Initiative announced in February it would “wind down” its investment in “social advocacy”. (CNN)

Investing is a lifelong journey

Here’s what you can learn today.

Adding alternative assets to a portfolio

Community Question: How can Australian investors effectively incorporate alternative assets like infrastructure, private equity, or commodities into a traditionally balanced portfolio?

We put this question to Peter Nevill, financial adviser at Viola Private Wealth

The old 60/40 equities and bonds portfolio is lazy and outdated. There are investments available to investors now that previously were the domain of only institutional and high net worth investors. When we talk of ‘Alternatives’, we are really just talking about good quality real assets, private equity managers, private debt and credit, and more niche strategies that can generate good returns in their own right, but act to better diversify portfolios as they don’t follow along with the ebbs and flows of equity markets. Position sizing, and understanding what you own and why you own it, is important. For example, to use the examples of infrastructure, private equity, and commodities above:

• Are you seeking something relatively defensive to help hedge against inflation? The long-term indexed contracts and essential nature of infrastructure assets (think electricity poles and wires, or gas transmission) can be a consistent source of income, or leaning into population growth via patronage assets such as tollroads, airports, or logistics.

• Do you want part of a portfolio to be shielded from share market volatility with exposure to an ‘uncorrelated’ investment (ie that don’t move in the same manner as share markets)? Then perhaps commodities might be suitable, or if you still want some cashflow generation, perhaps something more niche such as water rights.

• Wanting to better diversify your growth assets and access a different part of the company lifecycle than companies on share markets? Private equity provides exposure to privately owned companies (those that are yet to list on a stock exchange, such as the ASX, or those that don’t intend to). Some 90% of companies are private, and many companies are staying private for longer – there is a significant opportunity set and value creation potential that might have a home in your portfolio.

Each may make sense depending on your goals, comfort levels, and the purpose of the portfolio. Look beyond the status quo.

Interested in speaking to a financial adviser? Fill out the form on our website and we’ll match you with one of our hand-picked financial advisers.

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