AI sell-off, White House turmoil; gold battle heats up; YouTube eating Netflix
News in brief
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Fear-o-meter
Morning Brew on KFC shifting from Pepsi to Coca-Cola
After 40 years of offering PepsiCo products at its US restaurants, fast-food chicken chain KFC is making the switch to Coca-Cola starting in January. The finger lickin’ goodbye is a loss for Pepsi in the long-fought Cola Wars, but KFC thinks the move will help get the restaurant’s gravy train rolling again.
So, why did Kentucky Fried Chicken cross the road? Consumers, especially younger ones, have been increasingly thirsty for innovative and customizable beverages, like refreshers and dirty sodas. KFC believes Coke products will help it “innovate, meet changing tastes, and give customers more reasons to choose us,” KFC US President Catherine Tan-Gillespie told employees and franchisees in a letter obtained by CNBC.
KFC needs a leg up. Colonel Sanders and company have been losing ground to other chicken chains for years, dropping from No. 1 in US sales in 2012 to fifth overall in 2026, per research firm Technomic.
Getting expelled from the land of 11 herbs and spices is sure to be a source of heartburn for Pepsi, which was already in a tough place.
- The company’s stock is down double digits in the past year.
- Healthier habits and GLP-1 drugs have dinged its salty snack business in North America.
- Coke has about 44% of the US carbonated soda market, compared to ~26% for Pepsi, per Circana.
Winner, winner, chicken dinner: This isn’t the first time that Coke has convinced a Pepsi client to switch to the red team, having recently poached Culver’s, Arby’s, Panda Express, Marriott hotels, and the Costco food court. But Pepsi hasn’t sat by. It stole Subway from Coke, officially becoming its supplier last year.
But the KFC–Pepsi divorce stings a little bit more, since the two had become such an iconic pairing, like thighs and drumsticks. Pepsi owned KFC for more than a decade after scooping up the chain in 1986. Pepsi later spun off its restaurant businesses, including Taco Bell and Pizza Hut, in 1997 into a company that later became Yum! Brands.
Fear & Greed Q+A today
The Week Ahead with NAB: Chief Economist Sally Auld joins Sean to take a look at the uncomfortable combination of slowing growth and high inflation, and why NAB thinks interest rates have peaked:
"We know with monetary policy that there's a lag associated with it. And so some of the academic evidence suggests that maybe those lags take sort of 12 to 18 months to fully play out. And so even though the RBA lifted rates in February, we're not anywhere near that sort of 12 to 18 months time.
And so I think as the governor told us at a press conference in September, they just want a little bit more time to be able to observe exactly what's going on in the economy and to see the full impact of the tightening that they've executed.
And then the question really for the RBA and for markets is the hundred basis points of tightening and this slowing in the economy we've seen so far, and we will get a bit more at least on our forecasts, is that going to be enough to ultimately secure inflation coming down into the target band and staying there sustainably?
As we see it today at NAB, our answer to that question is, we actually think the RBA are probably done at 4.6%. I say that with the caveat that if anything's going to happen to rates in the next three to four months, more likely that they move up rather than down."
Uncertainty for markets
Wall Street's tech-heavy Nasdaq fell 5.5 per cent last week, its worst performance since Donald Trump's Liberation Day tariffs, as investors questioned whether enormous spending on AI infrastructure would deliver adequate returns.
The sell-off has been particularly brutal for AI infrastructure providers. CoreWeave, a business similar to Australia's Firmus Technologies, has lost 33 per cent of its value in just two weeks.
Meanwhile, violent demonstrations across France have added to European uncertainty, while Trump's decision to suspend tariffs targeting buyers of Russian energy has raised fresh questions about US foreign and trade policy.
With American midterm elections just two weeks away, investors are also watching for political developments that could reshape the economic outlook.
The immediate test comes from corporate earnings. Some of the world's biggest technology companies are due to report over the next fortnight, giving investors a clearer picture of whether AI investment is translating into profits.
The combination of stretched technology valuations, geopolitical instability and political uncertainty leaves share, bond and commodity markets vulnerable to further volatility.
Greed-o-meter
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Cancer drugs are by far the biggest money-spinner in the global pharmaceutical industry, with sales expected to hit US$232.5 billion this year. Diabetes medications are second, boosted by the booming popularity of GLP-1 drugs used for weight loss. But cancer drugs remain well ahead, with annual sales forecast to reach US$311 billion by 2031, accounting for almost one-fifth of the global pharmaceutical market.
Listen to today's episode 🎧
RBA warning: The Reserve Bank says confidence in its ability to bring inflation under control cannot be taken for granted. It warns that moving too slowly risks allowing inflation to become entrenched, while aggressive interest rate increases could cause lasting damage to employment and economic growth.
Gold Fields pressures Northern Star shareholders: Gold Fields has taken its $38 billion takeover campaign directly to Northern Star investors after the Australian gold miner rejected its initial approach. A successful merger would create the world's second-largest gold producer, although Northern Star maintains the proposal undervalues its business.
Spring property fails to fire: Australia's spring auction market is struggling, with just 1,423 capital city properties going under the hammer over the weekend, almost 46 per cent fewer than a year ago. The preliminary clearance rate was 51.2 per cent, while Brisbane recorded just 31.5 per cent.
Mortgage applications fall: Home loan applications fell 19 per cent in September compared with a year earlier, according to Equifax, with first home buyer applications plunging 22 per cent. The average first home buyer mortgage remains near record levels at $743,000, highlighting the pressure from high borrowing costs.
YouTube v Netflix: Netflix is cutting about 1,000 jobs as competition from YouTube intensifies. Research across 20 international markets shows average daily YouTube viewing rose to 99 minutes last year, overtaking Netflix at 93 minutes. Netflix shares have fallen around 40 per cent over the past year.