May 2026 Recap
Welcome to Insights with York. The conversations, thoughts and macro framework shaping how we invest through the cycle.
May reinforced a trend that has been building beneath the surface for some time: markets are becoming increasingly selective. While headline equity indices remained resilient, performance beneath the surface continued to diverge as capital concentrated into specific themes, sectors and assets.
Artificial intelligence infrastructure, semiconductors, energy systems, critical resources and productivity remained dominant themes throughout the month. At the same time, investors faced growing uncertainty surrounding inflation, government spending, taxation and geopolitical developments. Increasingly, investment outcomes are being driven not by broad market direction, but by where capital is positioned.
Federal Budget | Key Insights
2026–27 Federal Budget: One of the Most Significant Tax and Capital Allocation Reforms in Decades
The Federal Budget was arguably the most significant development for Australian investors during May.
While much of the public debate focused on housing affordability and taxation changes, we believe the more important discussion centres on capital allocation, productivity and long-term wealth creation.
The Budget represents one of the most significant tax and capital allocation reforms in decades, with implications extending well beyond property markets into shares, businesses, trusts, superannuation and family wealth structures.
Several measures proposed in the Budget have the potential to materially alter investment behaviour across property, shares, businesses and family wealth structures:
• Negative gearing for established residential property purchased after 12 May 2026 is proposed to be restricted from 1 July 2027, while newly constructed residential properties remain eligible under the Government's housing supply framework.
• The Government has proposed replacing the 50% Capital Gains Tax (CGT) discount with a cost-base indexation methodology and introducing a 30% minimum tax on net capital gains from 1 July 2027.
• Importantly, these proposed changes extend beyond residential property and apply broadly to CGT assets held by individuals, trusts and partnerships, potentially affecting shares, investment portfolios, business interests and other capital assets.
• Investors allocating capital towards qualifying new residential construction retain access to preferential treatment, reflecting the Government's objective of directing private capital towards increasing housing supply.
• CBA economists estimate the proposed reforms could leave national residential property prices approximately 3% lower than they otherwise would have been, while investor sentiment weakened materially following the Budget announcement.
• Sydney auction clearance rates fell below 50% during the post-Budget period, highlighting growing uncertainty surrounding the future attractiveness of residential property investment.
The broader issue extends beyond property.
Read Article Here
The Rate Of Change | Podcast
#52 Jason Coggins | AI, Productivity, Energy & The Future of Capital Allocation
We sat down with Jason Coggins to discuss the structural forces reshaping economies, businesses and investment markets.
One of the most important themes throughout the discussion was productivity. Despite Australia possessing many of the natural advantages required to benefit from global trends such as artificial intelligence, electrification and energy security, productivity growth remains weak while regulation, taxation and energy costs continue to create headwinds for business investment.
The conversation explored how artificial intelligence is increasingly becoming an infrastructure story rather than simply a software story. Data centres, semiconductors, power generation and critical resources are becoming strategic assets as global computing demand accelerates.
Jason highlighted that many of the largest beneficiaries of AI may not be software companies themselves, but rather the businesses supplying the physical infrastructure required to support the next generation of computing.
We also discussed:
• Resource royalties as an often-overlooked asset class offering exposure to commodity production and cash flow without many of the operational risks associated with traditional mining investments.
• Private credit as an increasingly important source of capital as traditional lending channels remain constrained.
• Small and mid-cap opportunities that may benefit from structural themes despite attracting little investor attention today.
A recurring theme throughout the discussion was capital allocation. Understanding where capital must flow over the coming decade may prove far more important than predicting short-term market movements.
Listen Here
Crown Macro Letter | Key Insights (May 2026)
A concise synthesis of the key themes emerging from Nicholas Crown's May work:
1. Markets Began Distinguishing Between AI Spending And AI Beneficiaries
One of the month's most important developments was the market's reaction to META. Despite strong earnings, investors questioned the scale of future AI expenditure.
META increased expected 2026 AI capital expenditure to approximately US$125–145 billion, while combined hyperscaler spending across META, Microsoft, Amazon and Alphabet is approaching US$700 billion. Rather than abandoning AI, capital rotated towards the businesses supplying the infrastructure required to support it.
2. Semiconductor Leadership Continued
Throughout May, semiconductors remained one of the strongest areas of the market.
TSMC reported:
• Revenue growth of 35% year-on-year
• Profit growth of 58% year-on-year
• Increased 2026 growth guidance
Crown repeatedly highlighted semiconductor manufacturers, foundries and networking businesses as direct beneficiaries of accelerating AI investment.
3. Capital Continued Flowing Towards The Physical Economy
Power infrastructure, energy systems, data centres, copper and critical resources featured prominently throughout the month.
Markets increasingly focused on the physical assets required to support future growth rather than purely digital business models. AI is becoming an infrastructure investment cycle as much as a technology cycle.
4. Commodity Markets Became More Selective
Copper continued benefiting from structural demand linked to electrification, grid expansion and AI infrastructure.
Meanwhile, oil's geopolitical premium rapidly unwound as expectations of an Iran agreement emerged. Crown highlighted how commodity markets are increasingly being driven by individual supply and demand dynamics rather than broad macro narratives.
5. Positioning Continued To Drive Outcomes
Crown's work repeatedly highlighted the importance of capital flows, options positioning and investor sentiment.
Large speculative investors remained heavily short equity futures for much of the month, while capital continued rotating towards semiconductors, AI infrastructure and select commodity exposures.
Increasingly, market outcomes were being driven less by economic forecasts and more by how investors were positioned heading into major catalysts.
Crown's Macro Framework — York's Key Thoughts
We view Crown's work not as a prediction tool, but as a valuable framework for understanding how capital is moving through markets.
His May letters reinforced several themes that also emerged throughout our conversation with Jason Coggins.
Most notably, we continue to see a growing distinction between narrative-driven investing and infrastructure-driven investing. While artificial intelligence remains a powerful theme, the physical assets supporting it — semiconductors, energy, power infrastructure and critical resources — are becoming increasingly important.
Interestingly, both Crown's market analysis and Jason's economic observations ultimately arrived at a similar conclusion. Whether discussing AI infrastructure, energy systems, productivity or capital flows, future returns are likely to be increasingly determined by ownership of productive assets and infrastructure rather than financial engineering alone.
The month also highlighted a broader challenge facing Australia.
Australia possesses many of the resources required for future growth, yet productivity remains weak. At a time when the country requires greater housing supply, increased infrastructure investment and stronger private capital formation, policy settings appear increasingly focused on taxing capital rather than encouraging its deployment.
In this environment:
• META's AI expenditure alone is expected to reach US$125–145 billion in 2026.
• Combined hyperscaler AI spending is approaching US$700 billion.
• TSMC reported revenue growth of 35% and profit growth of 58% year-on-year.
• Copper continues benefiting from electrification, grid expansion and AI infrastructure demand.
• Australian investors face increasing tax complexity and structural change following the Federal Budget.
We believe several themes remain particularly important:
• Productivity is becoming one of Australia's most significant economic challenges.
• Semiconductors, power generation and critical resources remain key beneficiaries of long-term structural trends.
• Resource royalties, private credit and select real asset opportunities continue to offer differentiated return streams.
• Portfolio construction, tax efficiency and investment structure are becoming increasingly important drivers of long-term outcomes.
Performance is increasingly determined not by what markets do, but by where capital is positioned.
Where Crown provides the framework, our podcast conversations provide real-time insights from investors, operators and managers actively deploying capital.
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