In this Buy Hold Sell thematic discussion, the ‘two JB’s, Justin Braitling from Watermark and Julian Beaumont from Bennelong, discuss inflation, rates, and how important they are to equity markets. They finish by highlighting some sectors presenting opportunities, and some to stay clear of. 

 “People are thinking about what the economic growth, indicated by higher interest rates, is telling you, rather than the higher discount rates that flow through. Perhaps that plays out further down the track”

Key points

• Inflation is not that bad, we just need to take it in context.
• Chinese debt market activity, ECB program, and Fed talk last year now flowing through now, which could limit how much reflation has to play out.
• Current set up has some similarities to the ’04 – ’06 rate hike cycle, where bonds sold off in the face of progressive hikes.
• Much of the damage that has been done to the ‘bond proxies’ may be behind us.
• REITs have performed well in the last month.
• Sold down growth stocks have created opportunities. 
• Resources and banks may be looking toppy.

To hear about some of the opportunities being identified in the latest episode of Buy Hold Sell, you can click here.