The Big Picture
OpenAI hacks Australian government. An AI agent hacked a Medicare data portal and three other government agencies in June, but OpenAI neglected to notify the Australian government until this month. Prime Minister Albanese demanded answers from OpenAI CEO Sam Altman, who is ironically at the UN General Assembly to warn the Security Council about AI risks posed to humanity. (FT | AFR)
Hot US economic data sparks bond, equity sell-off. Despite inflation and an oil crisis, US businesses are expanding at the fastest rate in four years and consumer spending is accelerating. The new data worsened inflation concerns and made another US Fed rate hike more likely. Bonds sold off, sending US 10-year treasury yields to 5.12%, their highest point since 2007. Equities followed: The S&P 500, Nasdaq, and ASX all fell by just under 1%. (S&P | Morningstar)
Australian grocery prices rise 7% in three months. The price of a set basket of goods rose by $2.79 to an average of $43.62, an increase of 7%, across Australia’s four largest grocery chains between March and June. The official inflation metric, the consumer price index, rose just 0.6% in the same period. Aldi offered the cheapest basket, while IGA’s was the most expensive. (Guardian)
Trillion-dollar crypto rally burns short-sellers. Cryptocurrencies sold off early last week after the US crypto-friendly Clarity Act was blocked, but rallied hard when the Securities and Exchange Commission greenlit digital versions of stocks for trading. The rally continued this week, and over US$2.7 billion of short positions on crypto tokens were wiped out. The crypto market has now added over $1 trillion in value since last month. (AFR)
Half of young Australian adults now living with parents. This year’s HILDA survey found 50% of Australians aged 18 to 29 are living with their parents, up from 39% in 2001. Interestingly, 55% of young men are living at home, compared to 45% of young women. (ABC)
Diesel prices soar as Trump floats export ban. Average US diesel prices hit a record US$6.53 per gallon, or AUD$2.43 per litre, prompting Trump to consider banning exports of diesel from the US, which is the largest diesel producer on earth. Europe imports 506,000 barrels of US diesel per day, and European diesel futures jumped 7% on the news. (ABC | FT)
Companies in the news
Medicare hack boosts cybersecurity stocks. Major cybersecurity companies CrowdStrike, Palo Alto Networks and Fortinet saw their stocks jump 5%, 5% and 3%, respectively, after PM Albanese revealed that OpenAI had hacked four Australian government agencies. The Nasdaq Cybersecurity Index rose 1.4% and is up 10% in the past two weeks as AI leaders raise safety concerns. (Nasdaq)
World’s largest copper mine halts work after BHP worker death. The mining giant halted operations at its Escondida copper mine in Chile after an incident occurred during maintenance. BHP is investigating the incident and has no timeline to reopen the mine, which was expected to produce over 1 million tonnes of copper ore this financial year. (AFR)
Ryanair CEO hits out at critics as he secures €150m share package. Michael O’Leary will receive shares worth €150m if he manages to boost the stock price by 83%, and said opponents to this package need to grow up. The ultra-low-cost Irish airline was once described as Britain’s most hated airline and famously charged a woman €300 to print out her boarding pass, making a €150 million CEO pay package unpalatable to the 40% of Ryanair investors that voted against it. (FT | Guardian)
Irish regulator hits Google with €403m fine. Ireland’s Data Protection Commission found the tech giant had manipulated users into being constantly tracked and that users were unaware their location was being used to influence them with advertisements. (Guardian)
Sydney suburb sours on Goodman’s $798m data centre. The ASX-listed developer was criticised by Liberal Senator Sarah Henderson for its planned data centre in Lane Cove. The community has adamantly rejected the project, which poses air and noise pollution risks for the neighboring school, conservation area, sports field and neighborhood. (Capital Brief)
Senior Morgan Stanley employee accidentally leaks deal list in email misfire
A Morgan Stanley employee accidentally emailed an internal document to clients this week, exposing a list of over 100 Asian investment banking transactions, including IPO prospects across China, South Korea, and India.
Mohamed Atmani, head of Asia Pacific Financial Sponsors, intended to send a client-facing version but sent the internal one instead, later attempting to recall the email. Morgan Stanley said it is addressing the breach. It remains unclear whether affected clients have formally raised concerns with the bank. (Bloomberg)
Ask An Adviser: What do lenders look for?
We asked financial adviser Adam Mastrosa from Alcove about how lenders perceive a share portfolio versus a property when considering a loan.
How do lenders view someone with a share portfolio versus property when assessing a loan?
Adam: A lot of investors assume a large share portfolio will automatically translate into borrowing power. Lenders look at shares and property a little differently.
With property, banks have a straightforward way of assessing the asset. They can value it, estimate the rental income and understand how it fits into your overall financial position. Investment properties fit neatly into traditional banking calculators.
Shares can be viewed positively, particularly if you've built a substantial portfolio, but lenders are generally more cautious when it comes to relying on share-related income. They will want to see a track record of dividends and may apply discounts to account for market fluctuations.
From what I see, the strongest position is often having a mix of both. Shares can provide diversification and liquidity, while property can provide security and helpful rental income. I believe lenders are looking at the overall strength of your position and your ability to comfortably manage debt.
Want to work with an adviser like Adam to figure out your borrowing capacity? Fill out the form on our website and we’ll match you with one of our hand-picked advisers to help you get started.
