Today’s News

The Big Picture

• US promises insurance and escorts for maritime trade in Gulf. After commercial insurers cancelled trade ships’ policies, Trump announced the US Development Finance Corporation would provide political risk insurance and guarantees for maritime trade, especially oil tankers, in the Persian Gulf and Gulf of Oman. He added the US Navy would also escort ships if needed. (USNI)
  
  

• First Dubai-Sydney flight arrives since start of Iran conflict. The Australian Defence Force is prepared to evacuate the over 150,000 stranded Australian citizens from the Middle East, but the Labor government is hoping commercial flights will suffice. Yesterday’s arrival is a promising sign considering over 4,000 flights across the Middle East are still be cancelled daily. (SMH)
  
  

• Trump tussles with Spain and UK over military access. Trump threatened to halt all trade with Spain after the country barred US military use of its bases for operations in Iran. He also criticised UK prime minister Keir Starmer, who refused to aid American offensive strikes in Iran. (BBC | Guardian)
  
  

• Australia’s economy grows faster than expected. Increased production in mining (up 2.6%) and agriculture (up 2.5%) led to 0.8% growth for the quarter, beating consensus estimates of 0.6%. In a classic case of good news being bad news, the strong economic growth will reinforce the RBA’s concern the economy is running too hot and may need a rate rise or two. (AFR)
  
  

• ASX drops on Iran and inflation fears while energy firms soar. The ASX 200 dropped 1.6% as rising oil prices sparked fears of potential inflation. Investors flocked to Aussie coal and oil companies, whose wares are now hotly demanded; New Hope (up 7%), Yancoal (up 5%), and Ampol (up 3%) were among the winners. (AFR)
  

Companies in the news

• OpenAI backpedals on Pentagon deal following backlash. The AI firm is adding additional guardrails to its deal with the Pentagon after a “QuitGPT” campaign went viral on X and Reddit. CEO Sam Altman admitted it looked “opportunistic and sloppy”, having snatched up the deal hours after Anthropic denied it over ethical concerns. (Guardian)
  
  

• Amazon facilities in the Middle East hit by drones. Three of Amazon’s cloud computing facilities in the United Arab Emirates and Bahrain were hit by Iranian drone attacks as the expensive facilities make good targets for strikes intended to cause economic disarray. (BBC)
  
  

• ARN stock rises despite Kyle and Jackie-O’s $200m blowup. ARN Media announced Kyle and Jackie-O’s controversial morning show is cancelled immediately following a dispute between the two. The spat will end a 10-year, $200 million contract with ARN, but investors seem to support the separation as the stock rose over 7% on the announcement. (Capital Brief)
  
  

• Apple launches budget-friendly iPhone amid AI concerns. Apple is hoping stronger smartphone sales will quell investor concerns that the company is falling behind in the AI investment race. The new iPhone 17e hopes to meet rising demand for cheaper smartphones, which have become more expensive as chip production capacity has shifted towards making AI chips. (CNN)
  
  

• Private credit woes worsen for Blackstone and Blue Owl. Investors in Blackstone’s $82 billion private credit fund want out, with quarterly redemption requests hitting $1.7 billion, equal to 7.9% of fund assets. Blackstone paid out the redemptions in full despite usually limiting redemptions to 5% per quarter. Blue Owl, another asset manager, is similarly sliding; its stock has fallen 50% in the past 12 months after halting redemptions on one of its private credit funds. (FT | FT)

What the…?

AI may be getting pretty good, but moments like this remind us it’s still in its infancy. The Washington State Department of Licensing implemented an AI customer service agent to answer calls, but when callers chose the Spanish option, it would simply speak to them in English with a heavy Hispanic accent.

The AI agent, supplied to the WSDOL by Amazon, would only speak Spanish for numbers, telling callers their wait time “is less than ‘tres’ minutes”. WSDOL announced it has fixed the glitch, leaving beginner Spanish speakers with one less place to practice their ‘numeros’. (News 10)

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Today’s Insight

The debt recycling decision

We spoke with Dylan Partiger-Green, financial adviser at Bold Wealth, on a recent episode on the costs and benefits of debt recycling.

How does income tax bracket change the calculation, if at all? Does it actually make sense above a certain tax threshold?

Dylan: Well, I think the example we just did with 30% shows that it works or 37%, it works at a lower than top marginal tax bracket. The biggest thing is your tax savings are going to grow if you are in a higher tax bracket. Yes. So it depends conversation. It probably doesn't make sense in a 0% tax bracket. No, no. And it also probably doesn't make a huge amount of difference in a 15% tax bracket. So 30%, I think I'd encourage people that want to know that, jump on the calculator, play around with it, see what your tax savings are, see your time horizon. It's just an indication. It's not perfect, right? But obviously the answer is as your tax bracket goes up, the benefit also goes up.

Thinking about getting started with debt recycling but don’t know where to start? Fill out the form on our website and we’ll match you with one of our hand-picked advisers, like Dylan, for a wide range of financial advice.

Today in Equity Mates