Today’s News

The Big Picture

• Deal to end Iran war has “largely been negotiated”. That was the announcement from President Trump over the weekend. He went on to say “the Strait of Hormuz will be opened”. Iran did not comment. (FT)
  
  

• US consumer sentiment hits all-time low. The University of Michigan consumer sentiment survey declined to 44.8 for May, down from 49.8 in April - which at the time was a record low. Americans - like all of us - are feeling the squeeze of high costs across gas, groceries and housing. (WSJ)
  
  

• Kevin Warsh sworn in as Federal Reserve chair. He inherits a tough job - facing a President that wants him to cut rates, while the data suggests he should be thinking about raising rates. Last week, US unemployment claims  fell to the lowest level in months, suggesting a strong labour market. That, alongside higher inflation, suggests the next move could be up. (WSJ)
  
  

• EU rejects UK push to access single market. 10 years after voting to leave the EU, and 6 years after actually leaving, the UK is pushing to regain access to the single European market. The EU rejected the push as unfair to member nations who are actually part of the EU to gain access to the single market. (FT)

Companies in the news

• Guzman y Gomez leaves America. The Mexican fast-casual chain has announced it will close all 8 of its Chicago-area stores, marking an end to its efforts to crack the US market. GYG first entered the US in 2020. Investors agreed with the decision, with shares up 10% on the day. (AFR)
  
  

• Legacy computer makers cash in on the AI boom. Lenovo announced strong quarterly results headlined by an 84% increase in AI-related revenue, which signalled good news for some older technology names. Dell, IBM and HP stock all rose, with Dell hitting a record high and IBM having its best week since 2002. (CNBC)
  
  

• Food delivery industry continues to consolidate. Uber upped its stake in Germany’s Delivery Hero from 7% to 19.5% last week, in a move that suggests it may try to acquire its food delivery rival. In the past few years, DoorDash acquired Deliveroo and Uber acquired Postmates as the once-unprofitable food delivery industry rationalises. (Bloomberg)
  
  

• IMAX searches for a buyer. Netflix, Apple and Sony are seen as likely suitors for the cinema chain. IMAX’s market cap is $2 billion, making it a rounding error for many of these large tech companies. (CNBC)
  
  

• Novo Nordisk’s weight-loss pill approved in Europe. The Danish drugmaker will be the first to sell an oral GLP-1 weight loss drug in Europe, as it gets approval ahead of rival Eli Lilly. Both Novo and Lilly are already selling these weight-loss pills in the US. (Reuters)
  
  

• Eli Lilly’s new weight-loss drug breaks records. While Novo celebrates in Europe, Lilly celebrated the trial results for its new weight-loss drug retatrutide. Patients taking the maximum dose lost an average of 70.3 pounds (31.9kg) in 80 weeks, the equivalent of 28.3% reduction in body weight. (NY Times)
  
  

• Anthropic’s surprise profit. The AI company is expected to record operating income of $559 million in the second quarter as it forecasts 130% revenue growth to $10.9 billion. To date, OpenAI or Anthropic haven’t made a profit as they grapple with high energy and compute costs and reinvest money for growth. (WSJ)
  
  

• SpaceX successfully launches redesigned Starship. In a move that will surely drum up excitement leading up to its IPO, SpaceX launched its 124-metre-tall Starship rocket and successfully returned it to Earth intact. (FT)

What the…?

NFTs are back, and so are rug pulls. An ASX-listed video game developer is being accused of a rug pull. PlaySide Studios raised $8.4 million selling non-fungible tokens for the game Bean Land, only to scrap development and leave investors and players holding the bag.

The NFTs were selling for up to $1,300 each and would have been playable characters within Bean Land. One prospective player is down $61,000 and looks like they won’t be getting their money back, as PlaySide is not offering refunds. (Capital Brief)

A message from Schroders

Schroders Invests in global private equity through a diversified, specialist-led approach, accessing a broad range of buyout, growth and secondary opportunities via established manager relationships and disciplined selection.

The Schroder Specialist Private Equity Fund is designed to provide Australian investors with exposure to this asset class within a professionally constructed portfolio aligned to long-term capital growth objectives.

To deepen your understanding of investing in small to mid-cap semi-liquid private equity, visit Schroders Australia’s private equity hub.

Private Equity is a less liquid asset class and may involve lock-up periods and limited redemption windows, making it suitable only for investors with an appropriate time horizon and risk tolerance. Past performance is not a reliable indicator of future returns, and it is recommended that investors seek professional advice before investing.

Today’s Insight

Two types of inheritance mistakes

We spoke with financial adviser Dylan Pargiter-Green from Bold Wealth about the common mistakes people make when they receive a lump sum from an inheritance.

What are some of the most common mistakes you see particularly early in the piece when the lump sum first lands?

Dylan: I think you can put people into two categories. You'll have the people that receive it and they just splurge. So they spend it and grief spend is a real thing. So whether it's “Mom would've wanted me to have this” as a justification for going buying a new car that you don't need or doing something that is beyond where the smart decision might lie.

The other one is actually squirrelling it away. There was an article recently that used an American study and 44% of people spent their entire windfall or inheritance within one year. And an average of $706,000. Now I imagine the upper end of that would be much harder to spend, but imagine spending say $706,000 in a year.

The more challenging thing for us is getting in front of those people before it happens, but then it's actually the people that squirrel it away. They're the people that we tend to see years down the track who have made no decision and that indecision paralysis that we talk about a lot, I don't know, that has a real impact on what your capacity for growing that wealth is, but also using that wealth effectively.

Want to work with an adviser like Dylan to get ahead? 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