Today’s News

The Big Picture

• RBA decisively hikes rates, completing reversal of 2025 cuts. The RBA hiked rates by 0.25 percentage points to 4.35% in an 8-1 decision. This is the third consecutive rate hike this year, completing the reversal of three rate cuts in 2025. The cash rate is now back to December 2024 levels, where it stayed 4.35% for all of 2024 in an effort to reel in rampant inflation in 2022 and 2023. (AFR | RBA)
  
  

• US and Iranian forces trade blows as ceasefire falters. Iran fired missiles and drones at US-aided ship, while the US claimed it had destroyed a handful of small Iranian naval boats, which Iran denies. Elsewhere in the region, the UAE blamed Iran for a drone strike on its Fujairah Oil Industry Zone, the first such attack since April’s ceasefire was announced. (NYT)
  
  

• Household spending rises 1.6% on transport costs. Rising fuel costs drove a 5.1% increase in transport spending in March, resulting in the higher overall household spending. Non-discretionary spending is also up 8.1% in the past 12 months as households absorbed significantly higher housing costs. (ABS)
  
  

• Labor to wind back EV tax breaks. The government will replace the existing full fringe benefits tax exemption with a 25% discount, which will save $1.7 billion. Soaring EV demand caused the estimated cost of the program to blowout from $605 million to $10 billion over seven years. (Capital Brief)
  
  

• World Cup fans outraged over extortionate US transit prices. New Jersey’s transport system has hiked round-trip ticket prices to $150 for fans going between New York’s Penn Station and MetLife Stadium — the cost is typically $13 for other events. Boston has similarly hiked the price of train tickets from $20 to $80 to Gillette Stadium. Fans are outraged, as FIFA’s ticketing policies have already made the World Cup prohibitively expensive. (FT)

Companies in the news

• Cbus to raise construction workers’ insurance premiums by 46%. Over 500,000 Cbus customers will experience the jump as the super fund passes along higher costs to members — AustralianSuper and CareSuper have done the same, blaming increased frequency and values of claims. Middle-aged manual labourers will face the biggest jump, with cover increasing by over $10 per week. (AFR)
  
  

• Anthropic teams up with Wall Street on new US$1.5bn JV. Blackstone and Goldman Sachs are among the firms joining Anthropic’s joint venture, an AI consulting group aimed at helping Wall Street integrate AI across their portfolios. OpenAI is launching a similar venture as AI firms work to entrench themselves within other industries. (FT)
  
  

• Chemist Warehouse breaks into UK with new acquisition. It’s parent company, Sigma Healthcare, is buying a major stake in London-based Greenlight Healthcare, which will licence the Chemist Warehouse brand in the UK. Chemist Warehouse has seen strong international performance, with international sales growing 25% in the past year. (AFR)
  
  

• Amazon launches integrated supply chain service. Amazon Supply Chain Services will provide freight, distribution, fulfillment, and parcel shipping for all sizes of businesses. Logistics companies’ stocks fell as Amazon moves to directly compete with names like UPS (down 10%) and FedEx (down 9%). (Amazon)
  
  

• Databricks plans $416m Australian expansion. The $186 billion US AI software firm services major Australian companies like Atlassian, NAB, and Telstra, and is hoping to grow its footprint with a new 2,000 square metre office in Sydney. (AFR)

What the…?

Big Tech’s latest obsession: Taste. With AI firms facing public scrutiny over environmental concerns and job destruction fears, Silicon Valley is doing its utmost to win back favour and shake off its “slop” moniker.

To break back into pop culture, tech firms are increasingly emphasizing style and taste, but Palantir took it a step further. In addition to AI-powered automated weaponry and mass domestic surveillance technology, Palantir now also offers a stylish denim coat and cool t-shirts, making the firm much more hip and tasteful. (New Yorker | FT)

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Today’s Insight

Senator David Pocock on housing tax reform

On yesterday’s episode of Equity Mates Investing, former Wallaby and current Senator David Pocock shared his ideas for common-sense tax reform for the housing sector. (Spotify | Apple | YouTube)

Bryce: If you were to write the upcoming budget, what would you specifically address from a tax point of view to try and make change?

David: We got a bunch of options costed by the parliamentary budget office. And the option we landed on was removing the capital gains tax discount on existing stock, but maintaining a paired back, I think 25% for new builds.

The argument that always gets used by the building industry and by both sides of politics is, "Oh, if there's no capital gains tax discount, you'll kill new builds, new supply." And so I think you can deal with that actually saying, "Listen, we're actually going to use our tax system to incentivize supply, but we're not going to have a situation with the existing builds and suburbs that time after time after time, first home buyers get outbid by property investors because the property investor knows that if it's not positive, they can just negatively gear it and then at the end they get their capital gain tax discount." So I think there's ways to turn it around. I'd love to see that happen.

Today in Equity Mates