Today’s News

The Big Picture

• Former RBA governor calls for capital gains tax shake-up. Ex-RBA governor Bernie Fraser has argued scrapping the capital gains tax discount on housing would be “a step in the right direction” for affordability. He said all Australians should have a “reasonable opportunity” to own and raise families in their own homes. (AFR)

  
  

• EU pauses US trade deal as tariff tensions flare again. The European Union has frozen progress on its proposed free trade deal with the US following a Supreme Court ruling against last year’s tariffs. President Donald Trump has warned countries not to “play games” as regions reassess their trade exposure. (BBC)

  
  

• Canadian PM heads to Australia, India and Japan. Prime Minister Mark Carney will visit Canberra, New Delhi and Tokyo this week to deepen economic ties as relations with the US cool. It will mark the first time in 20 years a Canadian PM has addressed Australia’s Parliament. (BBC)

  
  

• AI-driven recession report goes viral. A research note from Citrini Research has grabbed investors’ attention with a bold warning: an AI-driven recession. The report models a 2028 scenario where rapid automation slashes white-collar jobs, triggering weaker consumer demand and, ultimately, a stock market crash. (Business Insider)

Companies in the news

• FedEx sues US government over emergency tariffs. FedEx has launched legal action seeking a refund on tariffs imposed under Trump’s emergency powers. The move follows a Supreme Court ruling that the President lacked authority to apply the measures. (FT)

  
  

• Novo Nordisk slides 16% after drug comparison. Shares in the Danish drugmaker fell sharply after trials showed its latest weight-loss drug delivered 23% average weight loss, slightly below rival Eli Lilly’s 26%. Eli Lilly rose 4% on the news. (FT)

  
  

• Anthropic accuses Chinese AI firms of data scraping. The maker of Claude claims three Chinese AI companies used 24,000 fake accounts to generate 16 million conversations in order to improve their own models. Anthropic labelled the activity “illicit extraction.” (NYT)
  
  

• Earnings season keeps markets moving. Nine Entertainment jumped early before giving back gains after a 20% profit beat. Adore Beauty fell 27%, while Woodside was increased 3% despite a 24% drop in profit. (AFR)
  
  

• G8 Education tumbles as occupancy drops. Shares in the childcare operator have fallen 25% in the past five days as enrolments slump following serious criminal charges against a former employee. Centre occupancy sits at 54%, down 8% year-on-year. (AFR)
  
  

• Binance sacks staff after Iran-linked fund probe. Employees who flagged US$1.7bn flowing from Binance accounts to Iranian-linked entities were reportedly fired or suspended. The move comes two years after the exchange pleaded guilty to anti-money laundering breaches in 2023. (NYT)

  
  

• ASML says chip output to rise 50% by 2030. The Dutch semiconductor equipment giant plans to boost the power of its EUV machines from 600 to 1,000 watts, allowing manufacturers to produce significantly more chips per hour. (Reuters)

What the…?

EU takes aim at the ‘doom-scroll’. The European Union has told TikTok it may need to switch off some of its core features — including infinite scrolling — after ruling the app’s design is addictive, particularly for children. The move comes as a landmark case is currently being heard in Los Angeles examining whether social media platforms are deliberately designed to be addictive to young users, with Mark Zuckerberg appearing in court last week.

It’s the first major test of the EU’s new Digital Services Act, which aims to better protect users online. TikTok can challenge the findings, but if it fails, the penalties could be hefty, with fines of up to 6% of global revenue. (Politico)

Today’s Insight

Why investing for kids is so powerful

This was taken from our recent Equity Mates Investing episode titled ‘Investing for Kids: Turn Pocket Money Into a Portfolio’ (Spotify | Apple | YouTube)

Ren: Alright, well Bryce, let's start with the why investing for kids is so powerful. Spoiler alert. It's very similar to the reason why investing for adults is so powerful, but I think there's two big reasons why particularly for kids, it's so important to get them investing. And the first one is the awesome power of compounding is supercharged with time. The one thing that kids have is time. So investing early can set them up for life.

Bryce: Absolutely. So let's do a worked example. We're an adult. We're investing $50 a week for 35 years which is roughly the average working life, at a rate of return of 9% per annum. So you're investing $91,000 over that period. Your portfolio would grow to $561,000.

Ren: I mean, you're not complaining about that.

Bryce: Absolutely, but if you extend that to 50 years, you get started when you're younger, before you even start working, you would've invested $130,000.

Ren: Yeah. So rather than investing $90k, you've invested $130k because of the extra 15 years. Yep.

Bryce: So your nest egg at the end of it would now be $2.1 million.

Ren: Yes. That's not changing the amount you invest, that's not changing the return. That's only changing the time. You invest a bit over 1/3rd more, but you end up with 4x as much in your account. That is the awesome power of compounding because your money makes money and then that money makes money. So you're making money on all the previous years of returns and that's why time in the market beats time in the market.

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Today in Equity Mates