📈 Nvidia does it again | ASIC flags cracks in Private Credit

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The Big Picture

• Significant cracks flagged in Australia's private credit sector. ASIC has warned that Australia's private credit sector is facing a real test with the collapse of property developer Bathla. The company had $3.2 billion in liabilities largely owed to private credit funds. Several private credit funds including Merricks, Longreach Credit and Centuria Bass have begun restricting investor redemptions. ASIC has flagged the issue as significant as many Australians have exposure to private credit through their superannuation. (ABC)
  
  

• Thredbo's value halved as climate change threatens the ski resort. The owner of Thredbo Alpine Resort has written down its value by $149 million, citing the resort's structural exposure to a warming climate and upcoming investment in chairlifts and snow machines . The write-down comes during one of Australia's worst ski seasons on record, with climate scientists warning Australia could see a further 30% decline in ski season length by 2050. (ABC)
  
  

• Calls for import ban on ‘pervert’ smart glasses in Australia. The Greens along with several independents plan to introduce a bill next month to ban the import of smart glasses for at least 12 months. The glasses, which can film people without their knowledge with the press of a button, are now available for as little as $40. There have now been two Australian petitions calling for restrictions attracting tens of thousands of signatures. (ABC)
  
  

• NAB, ANZ and CBA all tip upcoming rate rise. NAB has joined ANZ and Commonwealth Bank in forecasting an interest rate rise at the upcoming RBA meeting in September. NAB chief economist Sally Auld stated that the RBA has repeatedly flagged that it would act if inflation continued to persist, and with July CPI data released yesterday coming in above expectations this appears to be the case. (AFR)

Companies in the news

• Nvidia beats expectations and posts record revenue. Nvidia reported quarterly revenue of US$96.2 billion as CEO Jensen Huang forecast 70% sales growth next year, above expectations of 45%. The strong result comes as Nvidia faces growing pressure over its financing arrangements with customers, including a US$500 billion chip financing guarantee, which critics have labelled "circular financing.” Nvidia claims the investments carry "limited" risk given strong demand for computing power. (FT)
  
  

• Meta settles teen addiction lawsuit for $23 billion. Meta has agreed to pay one of the largest corporate fines in history and implement new child safety measures to settle a landmark lawsuit over teen social media addiction. Meta will introduce daily time limits, eliminate push notifications during school hours and limit social comparison features such as like counts. Meta is now calling on TikTok and YouTube to adopt the same framework. (ABC)

  
  

• Qantas sees profits fall as Iran war costs $420 million. Australia’s largest airline reported a 19.7% fall in profit to $1.29 billion, largely due to increased fuel prices from the Middle East war. Qantas also announced an ambitious fleet overhaul targeting 70% next-generation aircraft by 2031, with its A380s to be retired by 2028. (SMH)
  
  

• Chemist Warehouse owner profit jumps on weight-loss drug boom. Sigma Healthcare, owner of Chemist Warehouse, reported a 22.3% rise in profit to $732.3 million, driven by demand for GLP-1 weight-loss drugs like Ozempic. Sigma expects GLP-1 sales growth to be "enduring" and to drive benefits across different health categories. (AFR)
  
  

• Bunnings and Kmart lead the way for Wesfarmers as Officeworks slumps. Wesfarmers saw net profit rise 8.3% to $2.9 billion, with Bunnings earnings up 5.1% to $2.5 billion and Kmart up 6% to $1.1 billion. Officeworks disappointed with earnings falling 22.2% to $165 million as it transitions its private-label supply chain to the direct-to-factory Anko model that has driven Kmart's success. (AFR)
  
  

• South32 and Ramsay shine as Bapcor sees car owners cut back. South32 reported a fivefold increase in profit on booming metals prices, as the company focuses solely on the electrification and decarbonisation transition. Ramsay Healthcare posted a 23% rise in full-year net profit driven by higher hospital admissions and cost cuts. Bapcor posted its worst annual result since listing, a $432 million net loss. The company reported that many car owners are delaying getting their cars serviced with cost of living pressures. (AFR | AFR | AFR)

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Wiped out: Toilet paper in hot demand as US-Canada trade war heats up

As Canada prepares to enact heavy retaliatory tariffs against the US, North Americans on both side of the Canada-US border are loading up on toilet paper, which stands to be hit heavily by tariffs on both sides.

Canada exported C$1.3 billion of toilet paper to the US last year, but imported C$791 million from the US as well. Both countries are placing up to 50% tariffs on toilet paper and the lumber used to make it, so blowing your nose, having a cry, or going to the toilet are about to become more expensive in Canada and the US. (Guardian)

Investors want income without taking on excessive risk and fixed income could be the answer. With yields still elevated relative to recent history, bonds are once again offering attractive returns alongside genuine diversification benefits. 

PIMCO believes investors can now potentially earn equity-like returns from high quality fixed income, without relying solely on equities. It's why many are reassessing the role bonds can play in a portfolio today. PIMCO is one of the world's leading active fixed income managers, with a broad range of Australian solutions, including actively managed ETFs, designed to help meet different investment objectives.

To learn more about PIMCO's range of income and fixed income solutions, including their active ETFs, visit pimco.com.au. Read the PDS and TMD and consider whether the product is right for you. PIMCO Australia Management Limited is the issuer

Ask An Adviser: Investment and Education Bonds

Financial adviser Matt Ingram from Northhaven gave us the rundown on investment bonds and education bonds, which look a lot more attractive with the recent changes to the 50% capital gains tax discount

Under the old capital gains tax rules, investment bonds were hard to justify. Even on the top marginal rate of 47%, once you applied the 50% CGT discount, your effective rate still came in under the 30% tax cap that investment bonds offer.

But the removal of the 50% CGT discount changes that calculation. For high-income earners, getting a capped 30% rate inside an investment bond is now meaningfully more attractive than it used to be.

Matt's take: If you and your partner are both above the 30% marginal tax rate and thinking about private school fees down the track, an investment bond is worth considering now. There is a 10-year rule that says you need to stay invested for a decade before withdrawals are tax-free, so starting early gives you more flexibility later.

His preference is investment bonds over education bonds. Education bonds come with higher fees, limited investment options, and a tax-free threshold for minors of just $416, which makes them far less practical than they appear on paper.

Want to work with an adviser like Matt to sort out your financials for your kids? Fill out the form on our website and we’ll match you with one of our hand-picked advisers to help you get started.

• Equity Mates Investing: Retirement is getting longer, and the old playbook of simply building a nest egg and drawing it down may need a rethink. We’re talking 30-year retirements on today’s episode. (Spotify | Apple | YouTube)

• Buy or Sell: We’re back with more community stock picks for our experts to analyse. From miners to energy to AI, we’ve got it all today. (Spotify | Apple | YouTube)