BUSINESS WATCH WITH MICHAEL AVERY
WATCH: Share Shootout
Guests share three of their picks to weather a new period of rising inflation and rates, with Michael Avery
Inflation is the hottest topic in markets right now. There are lots of “ifs”, “buts” and “maybes” involved. Are today’s inflationary pressures really sustainable? What happens as we learn to live with Covid-19 rather than locking down every five minutes? Can higher interest rates do anything to help untangle supply chains, or cut energy costs? (No).
They’re all important questions, but all this debate misses one key point about why inflation might be more persistent than expected, which is this: it’s the most politically convenient outcome.
Put very simply, if inflation is rising faster than interest rates, then the cost of your debt falls with each year, because your interest costs aren’t rising as fast as inflation. And the G7 is up to its eyeballs in debt after Covid-19. Many investors have never experienced inflation like we have seen the last few months, so it may be a good time to revisit your portfolio and confirm whether you still feel confident.
For March’s share shootout, we have asked stock pickers for three of the best to weather this new period of rising inflation and rates. Business Day TV spoke to Greg Katzenellenbogen, director at Sanlam Private Wealth; Caroline Cremen, portfolio manager at Adviceworx; and Nick Kunze, portfolio manager at Sanlam Private Wealth