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Here’s what you need to know today

• The Australian Treasurer, Jim Chalmers, is doing the pre-budget rounds. So far we’ve learned that the impact of America’s 25% tariff on steel and aluminium will be worth less than 0.02% of GDP by 2030, and that this year’s budget will be in deficit after he delivered back-to-back surpluses for the first time in a decade. Chalmers will deliver the budget next Tuesday (25 March) (Capital Brief | ABC News)
  
  

• Israel have launched a wave of airstrikes across Gaza, breaking the two month ceasefire. Israeli Prime Minister Benjamin Netanyahu said he ordered the strikes because of a lack of progress in ongoing talks to extend the ceasefire. Palestinian authorities reported 69 people died in the strikes. (AFR)
  
  

• Capital Brief have dug into why Nine Entertainment has been so slow to reply to CoStar’s $2.7 billion bid to buy real estate listing platform Domain. CoStar tabled its bid on 20 February and Nine, which owns 60% of Domain, is yet to respond a month later. Their best guess? Misalignment between Nine’s chair Catherine West and new CEO, Matt Stanton. (Capital Brief)
  
  

• Warren Buffett’s Berkshire Hathaway has increased its stake in all 5 Japanese trading houses that it first invested in in 2020. Buffett wrote in his latest shareholder letter that he admired the trading houses, Mitsubishi, Mitsui, Marubeni, Sumitomo and Itochu, and planned to hold these investments for “many decades”. (Financial Times)
  
  

• America has reported an outbreak of the H7N9 bird flu on a farm in Mississippi, the first time it has been detected in the US since 2017. This strain is thought to be more harmful to humans than the H5N1 strain that is affecting American poultry and has already seen more than 160 million chickens euthanised in the US. (Reuters)
  
  

• Chinese carmaker BYD has launched its ultra-fast electric vehicle charger than can add 470km of range in 5 minutes. This compares to Tesla’s Supercharger that can add 275km in 15 minutes. Tesla shares were down 5% while BYD was up 3% on the news. (Quartz)
  
  

• US President Trump had a foreign policy focus to start the week, lining up a call with Vladimir Putin to discuss Ukraine and telling Iran he would hold them responsible if the Iranian-backed Houthis rebels retaliated against America’s air strikes in Yemen that killed at least 53 people. (BBC | AP News)
  
  

• New Canadian Prime Minister Mark Carney bucked tradition by making his first trip abroad to Paris rather than Washington DC. Carney is aiming to strengthen European relationships after the US imposed tariffs on Canadian goods and Trump discussed making Canada its 51st State. Carney’s government is also reviewing the purchase of American-made F-35 fighter jets. (CNN)
  
  

• PepsiCo has acquired prebiotic soda company Poppi for $1.95 billion as it pushes harder into the ‘functional drinks’ category. Coca-Cola has also recently launched its own prebiotic soda as traditional soft drinks face a challenging regulatory environment, with US Health and Human Services Secretary Robert F Kennedy Jr. calling them “poison”. (Capital Brief)

What the…?

In 2019, Iceland introduced a 4-day workweek and made nearly 90% of workers eligible for a 36-hour workweek rather than a 40-hour workweek with no loss in pay. Six years later, the results are been positive with workers reporting better work-life balance and less stress and businesses not seeing any drop in output.

With Belgium passing a similar law (although their model puts 40-hours into 4 days) and pilot programs underway in Germany, Portugal, Spain and the UK, it seems the conversation around the 4-day workweek isn’t going away. (WECB Radio)

Investing is a lifelong journey

Here’s what you can learn today.

Why earnings don’t always drive share price

This is an excerpt from our conversation with Eric Marais, Investment Specialist at Orbis Investments. (Apple | Spotify | YouTube)

So the first piece of bad news is that there’s no real relationship between how fast a company grows and what its stock returns are. Which seems ridiculous. It sounds really counterintuitive, but across a large sample of stocks, there’s no relationship there. In fact, the relationship is the opposite—meaning companies that grow their revenues and profits faster tend to have lower stock returns.

So that’s value having outperformed growth. And there’s a 200-year history of that. Now that kind of ended in 2018. So we can all have a debate around whether you think that’s permanently changed or whether that’s just a cycle—because there’s always been a cycle within that 200-year history.

Sounds really counterintuitive, but at the end of the day, the stock market’s a discounting machine. So today, people are incredibly excited about some of the potential for these big tech companies. And so that potential, that excitement gets priced in and it has an impact on what the stocks can return in the future.

Want to watch Eric’s answer in full? All Basis Points are available in full on YouTube. Check out our conversation with Eric:

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