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Here’s what you need to know today

• The first test of new Liberal leader Sussan Ley’s policy priorities will be on show as the party reconsiders its support for Australia’s net zero target. While moderate Liberals support the target, Coalition partner the National Party and conservative Liberals are agitating against it. (Capital Brief)
  
  

• Meanwhile the first political challenge for the newly elected Labor Party appears to be the proposed tax on unrealised gains for Superannuation accounts above $3 million. Opposition finance spokeswoman Jane Hume called on Labor members to “talk sense” to the Treasurer. (Sky News)
  
  

• Australian wages have grown at 3.4% over the past year. Data from the Australian Bureau of Statistics show the Wage Price Index is accelerating after the previous reading of 3.2% for the 12 months to December. However, much of the wage growth came from government support (such as increased pay to aged care workers and childcare workers) and new public sector enterprise agreements. Beyond that, private sector wage growth was modest. (ABC News)
  
  

• US President Donald Trump kicked off his tour of the Middle East with a visit to Saudi Arabia where he claimed to have secured $600 billion in investment commitments, including sales of $142 billion of American weapons and an $80 billion commitment from tech companies including Google, Oracle, Salesforce and Uber to invest in both countries. (Reuters)
  
  

• The US will cut the tariff on low-value parcels coming from China from 120% to 54%. The move comes after the US and China agreed to reduce tariffs for 90 days while they negotiated a longer term deal. (WSJ)
  
  

• China also eased a trade restriction on the US, lifting their ban on Chinese airlines buying Boeing planes. Boeing shares were up 2.5% on the news. (Quartz)
  
  

• American inflation continues to trend down. The Consumer Price Index (CPI) grew at 2.3% for the past 12 months to April. Food prices fell 0.1% with egg prices - a potent symbol of grocery price increases during the 2024 campaign - falling 12.7%, the biggest fall since 1984. (NPR)
  
  

• Commonwealth Bank reported quarterly profit rose 6% year-on-year to $2.6 billion. Australia’s largest bank reported business loans grew 9% and there had been a slight tick up in bad debts amongst business and home loan customers. (AFR)
  
  

• Coinbase will become the first crypto firm to join America’s benchmark stock market index, the S&P 500. Coinbase shares jumped 24% on the news. (CNBC)
  
  

• Japanese automakers Honda and Nissan both reported tough quarterly numbers. Honda’s profit was down 25% while Nissan swung from profit to a loss of 676 billion yen for the year. What makes it worse? These results measure a period before America’s 25% tariffs on automakers kicked in. (Quartz)
  
  

• Microsoft announced it would be cutting 3% of its global workforce, or about 6,000 jobs. The announcement comes despite the tech giant reporting better-than-expected results in April, generating $25.8 billion profit for the quarter. (CNBC)

What the…?

Katie Perry is suing Katy Perry in the High Court of Australia. One is an Australian designer with a fashion label in her name, the other is an international pop star who recently went to space. They both want to sell clothes under the name in Australia.

This case has been making its way through the Australian courts for 5 years and touches on some important trademark and intellectual property issues. Does someone’s subsequent fame override the protection of an existing trademark? Can a trademark stop someone using their own name (or in Katy Perry’s case, her stage name)? The Australian High Court is being asked to decide. (NY Times)

Investing is a lifelong journey

Here’s what you can learn today.

Be careful of following expert stock picks

This is an excerpt from our conversation with Mark Lamonica, Director of Personal Finance at Morningstar Australia. Listen to the full conversation on Equity Mates Investing (Apple | Spotify | YouTube)

Question: What conventional wisdom in the industry do you think is wrong?

I think there's a lot of it. I'll concentrate on one thing, but I think one of the challenges that individuals have is we take our cues from professionals. So you think about a typical AFR article, they get some portfolio manager, he or she picks a couple names that they're investing in, and you have no context, right? You don't know if they own 500 shares or if this makes up a tiny percentage of their portfolio. You don't know if they will sell it a week later. And what gets portrayed in the media, sort of the behaviour that professionals do, and I understand why they're doing it, there's these structural impediments to doing what I think is good for individuals.

There's all these structural impediments and I think that we take too many cues from professionals. And number one, and I could go through a long list of them, the number one thing is equating risk with volatility.

For people that may not understand those terms and understand how this works in the investment industry, when they talk about risk, anytime they talk about risk, they talk about volatility. So basically share prices bouncing around.

And they have to do that because they don't know any of their investors. Somebody managing a super fund has no idea. They just have this pot of money. And so they use this common measure, this volatility measure.

So whether it's standard deviation or beta or whatever. For investors, that's not risk, right? Risk is defined as something bad happening. So what's something bad happening to me? It's not meeting my goal. And so when people take that volatility lens, they invest too conservatively and they're scared of things bouncing around when they're investing Super for 30 years.

Prefer to watch our conversation with Mark? Remember that all Equity Mates episodes are released in-full on YouTube:

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