Albanese introduces $22.7b bill to drive net-zero transition

Good morning. Here's what happened overnight and what you need to know today.

1.

Aussie greenprint: The Albanese government will today introduce to parliament its flagship $22.7 billion Future Made in Australia Act, the Prime Minister’s signature manufacturing push in answer to Joe Biden’s Inflation Reduction Act. Key measures of the bill, which aims to unlock private sector investment to drive “a more diversified and more resilient economy powered by renewable energy,” include a $1.7 billion innovation fund and $13.7 billion in tax incentives for green hydrogen and critical minerals. Businesses seeking investment must adhere to five "community benefit principles,” promoting secure jobs, skilled workforces, positive community engagement, robust local supply chains, and transparent tax management. Additionally, projects must align with a new National Interest Framework, prioritising crucial to national security projects or those offering a comparative advantage for Australia. The Coalition opposes the proposed production tax credits, while the Greens' support depends on excluding fossil fuel production. (Capital Brief)

2.

Drug diet: President Joe Biden and Senator Bernie Sanders demanded Novo Nordisk and Eli Lilly to reduce the prices of their popular weight loss and diabetes drugs, warning they would take action if the companies refused. In a USA Today opinion piece, they said surging demand for the medications helping patients lose up to 20% of their weight could cost USD411 billion ($616 billion) annually if used by half of obese American adults. That exceeds the total spent on all prescription drugs in 2022 by USD5 billion. "If the prices of these drugs are not substantially reduced, they have the potential to bankrupt the American healthcare system," Biden and Sanders said. "If Novo Nordisk and other pharmaceutical companies refuse to substantially lower prescription drug prices in our country and end their greed, we will do everything within our power to end it for them. Novo Nordisk must substantially reduce the price of Ozempic and Wegovy." Novo's Ozempic and Wegovy are priced at USD936 and USD1,349 per month, while Lilly's Mounjaro costs about USD1,100 per month. Shares of both companies fell on Wednesday. (Reuters)

3.

UK sewage saga: British water companies face increased litigation risks following a landmark UK Supreme Court ruling allowing private landowners and individuals to seek redress for sewage released into UK waterways. The Manchester Ship Canal won an appeal to sue United Utilities over contaminated discharges, overturning previous lower court decisions. "Discharges of foul water from the outfalls could be avoided if United Utilities invested in improved infrastructure and treatment processes," the court noted in its written ruling. United Utilities said it was considering the ruling and had initiated a £3 billion ($5.7 billion) programme to cut spills by 60% by 2030. The ruling opens the door for potential lawsuits against water companies, which have faced public anger and lawsuits for allegedly overcharging customers and under-reporting sewage discharges. Industry body Water UK said water companies were seeking regulatory approval to invest £100 billion to enhance water infrastructure and eliminate sewage spills. (Reuters)(Financial Times)

4.

Jobs lift: US job openings unexpectedly rose in May to 8.14 million, up from a revised 7.92 million in April, interrupting outsized declines in the previous two months. Economists polled by Reuters had forecast 7.91 million job openings, but said the data remained consistent with an easing in labour market conditions. The Bureau of Labor Statistic’s Job Openings and Labor Turnover Survey (JOLTS) showed the ratio of vacancies to unemployed workers held steady at 1.22, the lowest since June 2021. Layoffs rose by 112,000 to 1.654 million, while the quits rate remained unchanged at 2.2%. "The data are pointing to an ongoing normalization between supply and demand for labor," Rubeela Farooqi, chief US economist at High Frequency Economics told Reuters. Notable increases in job openings were seen in state and local government, durable goods manufacturing and federal government, while accommodation and food services saw declines. (Reuters)(Bloomberg)

5.

Powell power: The bond market halted a recent selloff as Treasury yields fell following Federal Reserve Chair Jerome Powell's comments indicating the US is on a disinflationary path, despite later data showing an unexpected rise in job openings. Treasury yields dropped on most maturities, with 10-year yields declining one basis point to 4.45%. At a ECB conference shortly before the data release, Powell noted a “substantial” improvement in the balance between worker supply and demand in the labour market. He characterised the job market as strong but appropriately cooling down. “Powell’s comments have been more relevant to the direction of yields as the Chair observed there has been quite a bit of progress on the inflation front in the US,” Ian Lyngen at BMO Capital Markets told Bloomberg. “Moreover, the risks are being characterized as more balanced as opposed to skewed toward the inflation side of the Fed’s dual mandate.” (Bloomberg)

6.

EV beat: Tesla stock surged after reporting a smaller-than-expected 5% decline in vehicle deliveries for the second quarter of 2024, aided by price cuts and incentives. The electric vehicle maker delivered 443,956 cars, including the Models S, 3, X, Y, and Cybertruck, surpassing Wall Street's expectation of 436,000, according to FactSet estimates. This included 422,405 Model 3 compact cars and Model Y SUVs and 21,551 of other models. It was a 14.8% increase from the previous quarter, helping shares jump as much as 10% on Tuesday. Despite the improvement, it was the first time Tesla posted a year-on-year sales decline for a second consecutive quarter. Tesla's price cuts, low-interest loans and cheaper leasing plans in key markets, have impacted margins. CEO Elon Musk anticipates higher deliveries in 2024, though Wall Street remains cautious due to the EV market's challenges and high interest rates. (Reuters)(Quartz)

7.

Mining metamorphosis: Bitcoin miner Northern Data is exploring an IPO for its AI cloud computing and data centre units, potentially valuing the combined business at up to USD16 billion ($24 billion), Bloomberg reported. Discussions with potential advisers are underway, with a Nasdaq listing possible in the first half of next year, the publication said, citing unnamed sources. Shares in the USD1.6 billion company surged as much as 41% on the news. The plan involves listing an entity comprising its cloud computing activities, named Taiga, and its data centres, called Ardent, while Northern might sell a minority stake beforehand, according to the report. Thinning profit margins in crypto mining have prompted miners to convert their energy-intensive data centres into digital infrastructure to support AI applications. Northern Data has secured substantial financing from stablecoin firm Tether Group, which has been used to purchase Nvidia AI chips.

8.

Video AI raise: Runway, an AI-powered video startup, is in discussions with investors, including private equity firm General Atlantic, to raise USD450 million ($674 million), valuing the company at around USD4 billion, The Information reported citing sources. General Atlantic is reportedly leading the funding round for Runway, which offers software that enables users to create videos from text prompts or images. Runway was last valued at USD1.5 billion after raising USD141 million from investors such as Google and Nvidia in June last year. (Reuters)(The Information)