Here’s what you need to know today

• Australia’s Reporting Season continues, here’s a few highlights from yesterday: coal miner Yancoal cut its dividend in a signal it is serious about buying more coal mines, shares fell 17%. Medical glove maker Ansell has cut 10% of its workforce as it works through a post-COVID glut of PPE, and owner of Kathmandu and Rip Curl, KMD Brands, reported sales were down 11%.
  
  

• The minutes of the Reserve Bank of Australia’s August meeting were released, and the bank considered raising Australia’s cash rate from 4.35% to 4.6%. A clear sign that the RBA’s next move could still be up. The Big Banks don’t think so (or so they say) as the AFR reports Commonwealth Bank, ANZ and NAB have all cut rates they pay on term deposits in an effort to get ahead of the RBA (or protect their margins).
  
  

• The good news for the US economy keeps coming. Goldman Sachs have looked at the data and concluded it “shows no sign of a recession”. While investment banks don’t always get it right, the US market has enjoyed 8 straight days of gains since investors panicked about the economy at the start of last week.
  
  

• Ukraine’s incursion into Russia continues as Ukrainian forces damage a third bridge in an effort to cut Russian supply lines. Russian media reports that 120,000 people have been evacuated from the border region.
  
  

• The US Democratic Party convention has kicked off as Kamala Harris and Tim Walz make their case to the American people. Night 1 started with a surprise appearance from Kamala and a speech from President Joe Biden. 
  
  

• Two of the world’s best convenience store operators may be merging. Japan’s Seven & i Holdings, owner of 7-Eleven, has received a takeover proposal from Canada’s Alimentation Couche-Tard.
  
  

• Semiconductor maker Advanced Micro Devices (AMD) bought ZT Systems for $4.9 billion, in an effort to keep up with Nvidia. ZT is a leading provider of AI infrastructure to hyperscale computing companies like Amazon Web Services and Microsoft Azure.

What the…?

Have you been seeing the term “demure” more recently? You’re not alone. Mentions of “demure” soared 3,631% on Twitter (X) last week as the TikTok trend exploded across the internet.

Unsure what this trend is all about? Here’s a quick explainer.

Investing is a lifelong journey

Here’s what you can learn today.

Question: When you hear experts speak about buying ‘good quality’ investments on the podcast, what do they mean by that? Is there criteria for ‘good quality’?

We put this question to Charlie Viola, partner at Pitcher Partners, in a recent podcast episode.

I often say to clients that we have three fundamental things that we want to tick the boxes of in terms of the assets that we buy.

One, we want the assets to be producing revenue for them.

We want the assets to be producing income or at least have the ability to generate revenue over a period of time.

Secondly, we don't want to blow up the capital.

We don't want to be buying things that have got high risk of impairment. I look at risk very differently to what some people do. Some people look at risk in terms of asset allocation and growth assets and, you know, income assets or defensive assets.

I don't look at it that way. I look at risk in terms of the risk of impairment. So not so much the risk of it going up and down, but the risk of it actually turning to dust.

I take the view that large cap defensive equities are actually a defensive asset. Yeah, they change in value, but they're going to be there tomorrow. And if they've got good balance sheets, they’re well-run, they've got good competitive advantages, they're going to have an ability to generate revenue into the future. So buy those types of assets.

The third one is, make sure that you're protecting the buying power of your money over time.

You absolutely want to have more growth assets in your portfolio because you want the revenue that that asset can produce to increase over a period of time, not reduce.

You want to make sure that, you know, if you're buying any company or any portfolio, if it's generating a dollar today in earnings, you want it to have the ability to generate a dollar ten next year and a dollar 20 the year after, and 30 the year after, so that you can protect the buying power of your money.

Want to hear more from Charlie? Listen to the full episode on the Equity Mates Investing podcast (Apple | Spotify)

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