Today’s News

The Big Picture

• Farrer by-election gives One Nation a major win. One Nation’s David Farley won more than 40% of the primary vote and is expected to win by a margin of around 9 percent after all preferences are counted. The Coalition, which has held the seat since 1949, was relegated to also-rans with Independent Michelle Milthorpe coming second with 25% before the Liberal candidate at 11% and the Nationals at 10%. (ABC)
  
  

• The stock market is not the economy. Two Conflicting stories are a reminder of the diverging fortunes in the US economy. On one hand, the US stock market is flying. 440 of the S&P 500 companies have reported quarterly earnings, 83% have beaten Wall St estimates and aggregate profit has so far risen 29% year-on-year. (Reuters)
  
  

• While stocks soar, consumers struggle. The other side of the story is the US consumer is struggling. Consumer confidence fell to a record low of 48.2 in the latest University of Michigan survey. Meanwhile, appliance maker Whirlpool noted demand hasn’t been this low since the 2008 financial crisis - a sign that consumers are cutting household spending. (CNBC | Quartz)
  
  

• Hantavirus panic tempered by WHO. As health authorities race to trace passengers who were on the Spanish cruise ship where the virus was first discovered, the WHO has assessed the public health risk as low, stating this is not the start of another pandemic. Moderna reported it is in early-stage research for a vaccine, which sent shares up 12% on Friday. (Bloomberg)
  
  

• Iran and US trade missiles and proposals. The US fired on two Iranian oil tankers while awaiting response for their latest peace proposal. Iranian Foreign Minister Abbas Araghchi said the US was undermining diplomatic efforts, but Iran’s foreign ministry maintained the war is in a “nominal ceasefire situation.” (Al Jazeera)
  
  

• Russia-Ukraine agree to 3-day ceasefire. The two sides agreed to suspend hostilities from 9-11 May and each swap 1,000 prisoners of war. Broader peace talks remain in a stalemate, with US Secretary of State Marco Rubio saying the US did not want to “waste our time” on peace talks that are “not moving forward”. (Reuters)
  
  

• A sign of things to come in Britain? Local council results saw a historic shift to Nigel Farage’s Reform UK party. Labour lost more than 1,100 seats, the Conservatives lost almost 500 and Reform picked up more than 1,300 council seats. BBC suggested that if those swings held in a general election, Reform would win 26% of the national vote, the Greens 18% and Labour and the Conservatives 17% each. Pressure is growing on Sir Keir Starmer to resign as Prime Minister, but he was “not going to walk away”. (ABC)

Companies in the news

• Macquarie Group nears record profit. The Australian bank reported a 30% rise in full-year profit to $4.85 billion. The Commodities and Global Markets division was the standout, taking advantage of volatility in global markets to account for more than 40% of the bank’s profit. (AFR)
  
  

• Huge week for AI picks-and-shovels. On Wednesday it was semiconductor designer AMD jumping 18% after a great set of results. Meanwhile, Micron and SanDisk - two companies that make computer memory - also had great weeks, up 35% and 28% respectively. These semiconductor and memory companies are all benefiting from the huge investments in AI data centres. (Barron’s)
  
  

• News Corp driven by everything but news. The Murdoch-controlled media empire reported profit up 13% for the quarter. Leading the way was real estate services (largely REA Group), data business Dow Jones and the book publishing segment. (Capital Brief)
  
  

• White House pushes deal for Intel. Last year, the US government took a 10% stake in chipmaker Intel. Since then they have been pushing Apple to have Intel produce some of its chips, including President Trump personally pushing it with Tim Cook. On Friday, the two companies announced a deal and Intel shares jumped 19% to a record high. (WSJ)
  
  

• James Packer backs OnlyFans. The Australian billionaire has been revealed as a major backer of the adult subscription website. The website sold a 16% stake to investors to raise money to continue operations after its owner, Leonid Radvinsky, died in March. (AFR)
  
  

• More companies warn of Iran war impact. Japanese carmaker Toyota has warned of a $4.2 billion hit in higher component costs and lost sales. Meanwhile, British Airways warned of a €2 billion hit from higher jet fuel costs, most of which it plans to recoup from higher business class fares. (FT | FT)

What the…?

Amazon launches parcel delivery via drone in UK first. Amazon has become the first retailer in the UK to launch a drone delivery service, dropping packages within a 12km radius of its fulfilment centre in Darlington, County Durham.

One early adopter admitted to ordering "everything under the sun - pens, paper, chocolates, anything to make it keep coming.” Though not everyone is convinced, with locals telling the BBC they would rather a person hand them their parcel than have it dropped into their garden. Amazon is confident demand exists and plans to slowly expand the service. (BBC)

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Today’s Insight

David Pocock on Australia’s short-term thinking

Last week the boys sat down with Senator David Pocock on Equity Mates Investing, he shared his concerns about Australia's failure to think long-term, and what it could cost us. (Spotify | Apple | YouTube)

Ren: Do you have a 10, 20, 30-year vision of what Australia could be?

David: I think Australia is a great country. This place could be incredible if we actually backed Australians who were working on the big challenges we face. A lot of that comes down to investing in things like research and development, we've hit a record low of R&D as a percentage of GDP, and that does not bode well for the future. The government spends $70-odd billion dollars every single year on procurement, and if we actually spent that on Aussie companies developing solutions in AI and Tech, you'd start to grow Australian companies that can then compete internationally. I think there's huge opportunity in diversifying our economy, but it does take political courage to actually look at the problem and start putting things in place now rather than a few years time going, "oh dear, we really stuffed that one up."

Today in Equity Mates