Today’s News

The Big Picture

• Chalmers tells households to keep waiting on budget relief. Any extra revenue flowing from the Iran war will be banked to pay down federal debt, now forecast to cross a trillion dollars next financial year, rather than returned to households as cost-of-living relief. Treasurer Jim Chalmers confirmed that revenue upgrades, NDIS savings of $35 billion, and general belt-tightening will all go toward improving a deficit that stood at $143.2 billion over four years as of December. (ABC)
  
  

• Australia's building approvals fall. Total dwelling approvals fell 10.5% in March to 17,300, unwinding part of February's extraordinary 101.1% surge, driven by a 26% drop in apartment and townhouse approvals. The total value of residential building fell 15.8% to $10.7 billion, though month-to-month swings are common given the influence of large apartment projects. (Capital Brief)
  
  

• Beauty products caught in Middle East crossfire. Crude oil supply disruptions are driving up costs for petroleum-derived cosmetic ingredients, hitting everything from lipsticks to moisturisers. An industry expert warns the price increases have already flowed through and will take months to unwind. With Australians spending $454 a year on average in a $12 billion market, beauty routines are about to get pricier. (ABC)
  
  

• Trump launches "Project Freedom" to reopen Strait of Hormuz. The US will begin guiding stranded vessels through the Strait of Hormuz from Monday under a plan Trump has dubbed "Project Freedom", warning that any interference will be met with force. Iran has severely restricted traffic through the vital shipping lane since the war began in February, with the US also maintaining a naval blockade on Iranian ports. (BBC)
  
  

• OPEC+ adds oil supply, but it's more gesture than solution. Seven major OPEC+ producers, including Saudi Arabia, will increase output by 188,000 barrels per day in June. Experts are calling it a largely symbolic move given the scale of supply disruptions caused by the US-Israel war on Iran. The announcement notably made no mention of the UAE, which quit the group last Friday. (Al Jazeera)

Companies in the news

• Tabcorp argues for tax breaks to fight money laundering. Tabcorp has pushed back against plans to strip gambling and tobacco companies of R&D tax breaks, warning it would hamper anti-money laundering and counterterrorism research. The Alliance for Gaming Reform has backed the proposal, arguing that legal or not, gambling companies don't deserve public subsidies. (Capital Brief)
  
  

• GameStop offers $US56bn to buy eBay. GameStop has made an unsolicited US$56bn bid to acquire eBay, threatening to take the offer directly to shareholders if the board rejects it. The deal would be partly financed by $20 billion in debt, which one analyst said would simply saddle eBay with GameStop's liabilities. eBay shares jumped more than 13% in after-hours trading on the news. (BBC)
  
  

• NAB bracing for what comes next. NAB has posted a drop in half-year profit, weighed down by a $700 million impairment charge, even as total business loans surged 11.5% to $306 billion, cementing its position as Australia's biggest business lender. However, CEO Andrew Irvine is already flagging that the crunch is coming, as the Iran war's economic shock looks set to test a borrowing boom that can't run forever. (AFR)
  
  

• A2 Milk recalls baby formula in the US over toxin contamination. A2 Milk is recalling thousands of US baby formula units after toxins were detected, sending shares down 10% yesterday on fears the damage will spread to its far more valuable Chinese market. (AFR)
  
  

• Atlassian pushes back on the AI doom narrative. Atlassian's quarterly earnings beat, driven by strong cloud demand and data centre revenue, sent the stock surging and challenged months of narrative that AI would render the software giant obsolete. (Capital Brief)
  
  

• Accent Group caught up in insider trading probe. The sporting and footwear retailer behind Platypus and Hype DC, is under scrutiny from ASIC over share sales by senior executives including CEO Daniel Agostinelli. The regulator has demanded documents from the company, which is backed by British billionaire Mike Ashley and is currently rolling out Sports Direct stores across Australia and New Zealand. (AFR)
  
  

• Portland Trail Blazers owner bets $225 million on pickleball. Pickleball Inc., parent company of Major League Pickleball, has raised a record $225 million from Apollo Global Management and billionaire Tom Dundon. Dundon, who also owns the NBA’s Portland Trail Blazers and NHL’s Carolina Hurricanes, was an early backer of the sport, which now counts 24 million US players in the US alone. (CNBC)

What the…?

Sydney taxi driver charges $188 from Airport to CBD. A structural gap in NSW's taxi industry means drivers caught overcharging can simply move to a new company with no obligation to report previous offences, making repeat behaviour remarkably easy to get away with.

Since a fare hotline launched in November 2022, more than 1,100 fines have been issued, including one driver who slugged a group of tourists $188 for a 13-kilometre trip from Sydney airport to the CBD. NSW Premier Chris Minns stepped in last November with a $60 flat fare trial for all Sydney Airport-to-CBD trips. (AFR)

A message from Viola Private Wealth

Wealth isn't one-size-fits-all. Your investment strategy needs to work for your life and not just the markets.

Viola Private Wealth manages over $2.5 billion for Australians with significant wealth, crafting tailored portfolios across public and private markets. With deep expertise and a client-first approach, Viola helps you focus on what matters: growing and protecting your capital with clarity and confidence.

Today’s Insight

Mortgage vs. Investing

We asked financial adviser Dylan Partiger-Green from Bold Wealth for his thoughts when people are deciding between paying down their mortgage faster or investing.

How do you decide between paying down the mortgage faster or investing?

Porque no los dos? It really depends on your time in life, what the goal is and how you plan on using the family home asset moving forward. If your time horizon is long enough, before wanting to give up the daily grind, you’re statistically better off investing your surplus (within the right structures and within the right risk allocation). Simply put, a diversified high growth index (Vanguard High Growth - 8.85% NET since inception in 2002) has outperformed mortgage rates (6.2% average since 2000) by approximately 2.6% since the turn of the century. This includes a time where mortgage sizes were significantly smaller than today as well. For most of our clients in accumulation, we’d encourage investing before paying down the mortgage and if there is the capacity to do so, investigating strategies like debt recycling to help accelerate this creating some tax efficiencies.

The main reason we look at investing over our mortgage is the compounding effect – as the build of your wealth into investment will compound towards a growing asset, rather than working towards a 0 balance on your mortgage. Once the mortgage is paid off (or in a comparable world, the investment balance is equal to the mortgage remaining all things considered) you effectively have a starting base of 0 across both. The difference here is that with no mortgage, you’ve got higher cashflow to begin building an investment base. With invested funds, you’re starting with a large capital balance, which is likely to compound at a rate greater than you can regularly save even without mortgage payments. Given the appropriate time horizon, waiting until retirement and then clearing the mortgage and keeping the gains above and beyond this stage comes out on top. (see debt recycling case study – Mr Equity and Mrs Mates)

Want to work with an adviser like Dylan to get your portfolio put together? Fill out the form on our website and we’ll match you with one of our hand-picked advisers to help you get started.

Today in Equity Mates