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Here’s what you need to know today

• The US has launched a review of the 2021 AUKUS submarine deal. The deal has Australia spending $368 billion over the next three decades, starting with acquiring 5 nuclear-powered Virginia-class submarines from the US from 2032 as the US, UK and Australia create AUKUS-class nuclear submarines due to enter service in the late-2030’s and early-2040’s. (Financial Times)
  
   

• Elbridge Colby, the US Undersecretary of Defense for Policy, will be leading the AUKUS review. He hasn’t minced words about his opposition to the AUKUS deal. In January 2024, Colby told ABC News the US would be “crazy” to give away its “single most important asset” in reference to these Virginia-class submarines. (Capital Brief)
  
  

• China and the US appear to have reached a temporary trade truce. US President Trump has said China will now provide rare earths “up front” while China is yet to comment. China mines 70% and processes 90% of the world’s rare earths giving it a stranglehold on the supply of minerals critical for a variety of technologies. (WSJ)
  
  

• The trade truce is welcome news as data from May shows imports at several of America’s busiest ports dropped sharply. Overall, US imports from China fell 28.5% year-on-year, with West Coast ports of Long Beach down 21%, Los Angeles down 9%, Seattle down 17% and Tacoma down 39%. (Reuters)
  
  

• The CEO of Australian fertility giant Monash IVF has stepped down. Michael Knaap resigned after Monash IVF admitted to its second embryo mix-up in just 3 months. (AFR)
  
  

• Australian hearing device maker Cochlear cut its full-year profit guidance following slower than expected sales. Shares were still up 1% on the day as the company announced a number of new products that it expects to support sales growth in FY26. (Capital Brief)
  
  

• Film and TV giants Disney and Comcast sued AI image generator Midjourney, calling it a “bottomless pit of plagiarism”. Midjourney has been used to recreate images of popular characters including Star Wars and Frozen. (BBC)
  
  

• Elon Musk has acknowledged his regrets over his posts about US President Donald Trump, posting on Twitter/X, "I regret some of my posts about President Donald Trump last week. They went too far." (ABC)

What the…?

America’s latest inflation came in at 2.4% for the year, a pleasing result given May was filled with tariff uncertainty. Somewhat less pleasing, at least according to the Wall Street Journal, was how America’s inflation data was collected.

With large DOGE-related job cuts at the Bureau of Labor Statistics, the bureau was forced to cut back on the number of price checks it did across the economy and was forced to rely on ‘educated guesses’ for as much as 29% of the data collected. (WSJ)

Investing is a lifelong journey

Here’s what you can learn today.

How much should your portfolio drift?

This is an excerpt from a recent episode of Get Started Investing where we discussed portfolio rebalancing. (Apple | Spotify | YouTube)

Bryce: I'm going to be honest, Ren, I don't necessarily stick to a hard 25/25/25/25 split [an equal split across his 4 core ETFs]. I'm kind of happy for there to be a bit of drift because over the long term, unless it gets really out of whack, and the US just completely falls out of favour, I'm not sort of dedicated to a hard allocation.

Ren: Yeah, I think that's a really important thing to stress, and we're going to hit that point later in the episode around, I guess, some thresholds that you will be comfortable with. Because realistically people talk in such fixed percentages, 60/40 or 25/25/25/25, but that's just unrealistic. If you wanted to hold to a 60/40 split, literally every day it would go out of whack just because different markets move differently. So there's no way you could stick to that hard and fast threshold.

So I'm the same as you. I have a pretty high tolerance for things drifting, but I wouldn't want them to sort of get out of whack more than, I don't know, 20 to 30% of each other. Then I would think about selling. But really the way I actually rebalance, is with my contributions.

I have a dollar cost averaging strategy where every time I get paid each fortnight, I put some money into my core portfolio, but then I also put some money away, I guess for more satellite investments. But from time to time when my portfolio has gotten a little bit out of whack in my core, I'll also use that money to supplement my core and put some money into an ETF that's gotten a bit smaller than their peers. So that's how we do it, I guess mainly we think about the new contribution.

I would also hazard a guess that because we are relatively young and relatively, I was about to say relatively poor, but that's probably a bit of a pejorative term. We have lower portfolio balances than many of the clients that the advisors we speak to are dealing with. When you start having bigger balances, you have more asset classes, and also you have more immediate financial goals, you've got families and you're starting to think about getting the family home or getting kids through school and stuff like that. Then obviously your risk tolerance changes and rebalancing becomes more important. Whereas for us, we're pretty unencumbered. We don't have kids. We just want to grow our wealth as much as possible. Our risk tolerance is higher and therefore our willingness to let winners run and let portfolios drift is a little bit higher as well.

Prefer to watch your investing content? Get Started Investing has its own YouTube page. Check it out and make sure to subscribe:

Today’s sponsor is Fidelity

After a rollercoaster start to 2025, investors are asking whether the era of US exceptionalism is coming to an end.

While headlines continue to focus on the Mag Seven, the next chapter of US market leadership may be quietly forming in the middle.

Issued by FIL Responsible Entity (Australia) Limited, ABN 33 148 059 009, AFSL No. 409340. This is general information only and is not intended to be advice of any kind. Consider the PDS and TMD available at www.fidelity.com.au

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