• Just like that, Sam Altman is back as the CEO of OpenAI

• More information is coming to light about his firing, including concerning revelations that several OpenAI researchers sent the Open AI board a letter warning of a “powerful artificial intelligence discovery” that they said could “threaten humanity”.

• Changpeng Zhao (aka CZ) - the co-founder and CEO of the world’s largest crypto exchange Binance - pled guilty in the United States to not maintaining an anti-money laundering program. As part of the punishment he will step down as CEO.

• Nvidia reported Q3 results, which included a 206% increase in revenue from Q3 last year

• Argentina elected a new President, Javier Milei, who has announced plans to get rid of the Argentine Peso and replace it with the US Dollar

• Australian breakfast radio duo Kyle and Jackie-O have signed a 10 year contact extension worth a reported $200 million

Norway is building the world’s largest wind farm – to power oil and gas fields

How’s this for a good-news/bad-news headline. The world’s largest floating offshore wind farm seems like a great step forward in the world’s effort to ween itself off fossil fuels. Using that wind farm to extract more oil and gas seems counterintuitive.

But if we take a step back and think about Norway, it has always had a counterintuitive relationship with fossil fuels. It is a country built on fossil fuel wealth, that now leads the world in electric vehicle adoption (79% of new cars sold in 2022 in Norway were EVs). It is a country that has built such vast wealth from oil that its Government Sovereign Wealth Fund has $1.5 trillion (almost $300,000 for every citizen of Norway). But that fund appears to be slowing divesting fossil fuel holdings, having announced it will start by divesting upstream oil and gas.

So if any country was going to build renewable energy to extract more non-renewable energy resources, it would be Norway.

At the core of Norway’s contradiction is a continued reliance on the fossil fuel industry. The sector currently accounts for 14% of GDP and over 60% of the country’s exports. It is simply not ready to give it up.

One other thought we had when reading this article, the company building the offshore wind farm believes they will be able to provide about 35% of the energy needed to power the oil and gas extraction, and that 35% will reduce about 220,000 tonnes of CO2 emissions each year. Which is a real reminder of how energy intensive fossil fuel extraction is, and just makes you think about the emissions from the remaining 65%.

Rideshare & Delivery Nov '23: Profitability and Strong Growth (for some)

This article takes a deep dive on the world of rideshare and food delivery. For a long time all of these businesses - Uber, Lyft, Doordash, Deliveroo etc. - were very popular, fast growing businesses. Which was perfect when times were good and investors were willing to fund fast-growing, money-losing businesses. 

But then, come 2022 and rising interest rates, many of these businesses fell out of favour. 

In the past two years, all of these businesses have been focused on reaching profitability. And some have had more success than others, which has been reflected in their share market performance.

This article takes a look at these key players and how they’re travelling. Our biggest takeaway is simple: Uber is dominating. As one of the only platforms generating positive free cash flow, the way the business has been able to turn itself from a money-losing business is pretty impressive. 

The great wealth transfer: how Australian banks, supermarkets and airlines have moved billions from customers to shareholders

This is an article sure to elicit controversy given most people reading it will own shares in these large Australian companies either directly, through index ETFs or through their Super. But if we don’t engage with ideas we don’t agree with, then are we really challenging ourselves and our positions.

The article is focused on the record profits we’ve seen from some of Australia’s largest companies, including record annual profits from Qantas, Commonwealth Bank and ANZ. It argues that high levels of profit are concentrated in industries with weaker competition in Australia - travel, supermarkets and banking - and that is a sign of these companies profiteering in the inflationary environment (basically, the argument is, they are raising prices faster than their costs to increase their profits).

There is arguments on both sides of this. There is no doubt that many of Australia’s largest companies are facing cost-push inflation from higher energy and food prices overseas, the banks are facing higher funding costs and all of this has been exacerbated by the weak Australian dollar which further imports inflation. But more recently, there are signs that many of the inflationary pressures are coming from right here at home.

New RBA Governor, Michelle Bullock, recently gave a speech and made clear that we can’t keep blaming overseas forces for Australia’s rate of inflation.

• “The remaining inflation challenge we are dealing with is increasingly homegrown and demand driven”

• “Hairdressers and dentists, dining out, sporting and other recreational activities - the prices of all these services are rising strongly” 

• “If we look across the CPI basket, around two-thirds of items have inflation running above 3 per cent - indeed, often a long way above that number” 

Supporting Bullock’s argument, The Economist recently published an ‘Inflation Entrenchment Index’ that ranks countries on how sticky inflation is within their domestic economy. Australia is #1, with a meaningful gap to second place.

All of this is to say, we are going to need to look more and more at the pricing decisions of Australian companies if inflation remains entrenched. In a world where inflation in the United States fell from 3.7% (12 months to September) to 3.2% (12 months to October) and in the UK fell from 6.7% to 4.6% in the same timeframe, if inflation is truly being driven by overseas forces, we’d expect to see a similar fall here at home.

Australian businesses and government (and in particular policies around the housing and rental market) will be in focus if Australia’s inflation rate of 5.4% (12 months to September) doesn’t fall in a similar manner.