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1. Watching the shoppers…

US Retailers had a strong week. We saw solid results from the likes of Abercrombie, Burlington, BestBuy, The Gap, Birkenstock and Nordstrom. Meanwhile Costco said customers seem to be back to spending on optional purchases, with the highest comps coming from non-food categories, toys, tires, lawn and garden, and health and beauty.

It seems like it’s a different story in Australia. Retail sales for April came in softer than expected. And CBA’s cost of living report is showing consumers are trading down to QSR (quick service restaurants) at the expense of eating out. Interestingly, we are seeing QSR holding share rather than losing customers who are trading down further to eating at home – which bodes well for High Conviction and Absolute Return Fund holding Domino’s.

Source: CBA (May 2024)

2. Interest in interest…

US government interest costs have surpassed defence and Medicare spending, as we continue on a higher for longer interest rate trajectory.

US Government outlay ($bn)

Source: Evans (May 2024)

3. The power of technology…

It’s no secret that generative AI uses a lot of power. While a typical Google search consumes ~0.3Wh of electricity, an AI-powered Google search consumes ~7-9Wh. The electrical systems are also the greatest cost component when building a data centre, making up around 50% of the total cost according to Southern Cross Electrical.

In addition, Bloomberg New Energy Finance forecasts net-zero would require annual investment to triple from US$274 billion in 2022 to US$871 billion by 2050, with a key driver expected to be the exponential power demand provoked by generative AI.

Energy consumption for different search types

Source: Alex de Vries (May 2024)

Cost components to building a data centre (USD per square foot)

Source: Southern Cross Electrical Engineer (May 2024)

Power consumption per server

Source: Uptime Intelligence (May 2024)


This article is prepared by Firetrail Investments Pty Limited (‘Firetrail’) (ABN 98 622 377 913, AFSL 516821) as the investment manager of the Firetrail Australian High Conviction Fund (ARSN 624 136 045), the Firetrail Absolute Return Fund (ARSN 624 135 879), the Firetrail Australian Small Companies Fund (ARSN 638 792 113) and the Firetrail S3 Global Opportunities Fund (ARSN 653 717 625) (‘the Funds’). Pinnacle Fund Services Limited ('PFSL') (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the relevant Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.

Links to the Product Disclosure Statement: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

Links to the Target Market Determination: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

For historic TMD’s please contact Pinnacle client service Phone 1300 010 311 or Email

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