Today’s News

The Big Picture

• The Claude wrecking ball keeps swinging. The cybersecurity industry was left reeling after AI lab Anthropic announced a new product Claude Code Security. Cybersecurity stocks dropped, led by Crowdstrike and Cloudflare both down 8%. In recent weeks, Claude product launches have led to similar falls for legal, advertising and data software platforms. (Bloomberg)
  
  

• Trump activates Plan B. Hours after the US Supreme Court ruled Trump’s tariffs illegal, President Trump announced a new 10% global tariff for the next 150 days under a different Federal Government authority. Treasury Secretary Scott Bessent said revenues collected from tariffs would be “virtually unchanged”. (Guardian)
  
  

• Despite Trump tariffs, US trade deficit widens. America’s trade deficit grew 33% to $70bn in December. Trade in goods with China has dropped sharply, but imports from Vietnam, Mexico and India have made up the difference. (Bloomberg)
  
  

• Private credit worries. Leading US private lender Blue Owl restricted investors exiting a fund and was forced to sell $1.4 billion of assets. This sent a shiver across the private debt industry with Blue Owl, Ares, Blackstone, Apollo, Carlyle and KKR all falling sharply. (FT)
  
  

• Australian Super Funds tops the Big Banks. For every $1 of funding for Australian businesses, 44 cents now comes from Australia’s $4.5 trillion Superannuation sector. This compared to 36 cents from Australia’s banks. (Capital Brief)

Companies in the news

• Guzman y Gomez tests investor patience. The fast casual Mexican chain reported revenue up 23% and profit up 45%. However, same store sales for its US restaurants only grew 3% as losses widened leading shares to drop 14%. (AFR)
  
  

• Eucalyptus acquired by Hims & Hers Health. Friday was a banner day for the Australian startup ecosystem. Australian telehealth platform Eucalyptus was acquired by US peer Hims & Hers Health for $1.6 billion. Last year, Eucalyptus doubled revenue to $600 million. (AFR)
  
  

• Rio Tinto disappoints. The world’s largest iron ore producer missed profit estimates due to a weaker-than-expected iron ore price. Much like mining peer BHP, Rio’s result was buoyed by the copper price hitting all-time highs as Rio increased output at its Mongolian copper mine. (AFR)
  
  

• Aston Martin gets desperate. After the British car maker issued its third profit downgrade in months, the luxury car maker is planning to sell the naming rights to its Formula 1 team for £50m. (Guardian)
  
  

• Walmart falls behind Amazon. The retail giant is no longer the largest company by revenue. It reported quarterly revenue of $191 billion, marking the second consecutive quarter it has fallen by Amazon. Notably, 23% of Walmarts sales are now online. (Quartz | Walmart)
  
  

• OpenAI nears $1 trillion value. The AI company behind ChatGPT is lining up $100 billion in funding that will value it at $850 billion. For comparison, Anthropic’s recent funding round was at a $380 billion valuation. (Bloomberg)
  
  

• Nestle getting out of the ice cream business. The world’s largest food company announced plans to sell its ice cream business as it reported an 8% fall in overall profit. Instead, it will focus on coffee, pet-care, nutrition and snack brands. (CNBC)

What the…?

Switzerland to vote on capping population at 10 million. The Swiss will head to the polls in mid-June to decide whether immigration should be limited to stop the population exceeding 10 million. The country currently sits at 9.1 million people.

If the population hits 10 million under the proposal, Switzerland would scrap its free movement agreement with the EU. Considering the EU is Switzerland’s biggest trading partner, that send shockwaves across the Swiss economy. (CNN)

Today’s Insight

How prediction markets are taking over traditional sport betting companies in the US

This was taken from our recent Equity Mates Investing episode titled ‘Prediction markets are coming for Sportsbet & Pimp My Portfolio with Owen Rask’ (Spotify | Apple | YouTube)

Bryce: So there are two major players in the US. The first is Kalshi and the second is Polymarket. Monthly active users are growing incredibly quickly. Kalshi at the start of 2025 had 600,000 monthly active users. They now have 5.1 million in just over a year.

Alec: Obviously we just had the Super Bowl and some of these numbers that we're going to talk about today come out of the Super Bowl, America's pinnacle of gambling. But here's one number, on Kalshi alone, there was $100m in trades on which song Bad Bunny would perform first in the halftime show.

Bryce: Crazy

Alec: Yeah, it's just a huge amount of money being gambled on one very specific outcome. I guess the story that we're talking about today is the biggest story, which it's disrupting America's sports betting market. Now Bryce, you called it a $14 billion sports betting market, which is how much revenue the sports books are making. In terms of the amount that Americans are gambling on sports, it's over $120 billion. And you've got to remember that that's basically come not quite from zero because you could gamble on sports in Las Vegas, but close to zero because before 2018 sports betting was illegal in every other state in the US and then the Supreme Court overturned that decision. So it's been a huge rise in sports betting. But last year was the first year where excluding new states, sports betting was actually pretty flat. The volumes were pretty flat in America. And the big reason why is that these prediction markets are starting to cut into their market share.

Bryce: The numbers support that. If you look at bets placed in Nevada, it was the lowest amount in over a decade at $133m placed on the Super Bowl. The question is where is that money going? A recent Financial Times analysis found that bets on Kalshi are at $1.3 billion, which is about a quarter of the sports book revenue for US betting giant Draft Kings

Alec: And Kalshi reported that they had over $1 billion in trades. Let's just call them bets. So yeah, the money is flowing into these prediction markets meaningfully. Unsurprisingly, investors are freaking out and the publicly traded sports books are selling off. Just this year alone, so what we're in mid Feb, DraftKings is down 39% year to date and Flutter is down 43% year to date. Now I said that this had an Australian angle prediction markets are not legal yet in Australia, but Flutter, it's the gambling giant. It owns Paddy power in the UK. It owns Fox Bet in America, it owns FanDuel in America. But here in Australia amongst a number of brands it owns Sportsbet and Flutter and DraftKings are both looking to get into the prediction market game. Flutter is looking at doing it through FanDuel, but if they figure it out in the US I'm sure they'll start lobbying to get it legalised here.

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Today in Equity Mates