Living cost pressures will be so hard on consumers that the Reserve Bank of Australia could be the first central bank to start cutting interest rates, yet businesses are still on course for an earnings recession, says Morningstar’s investment chief.
And that is before the commonly called “mortgage cliff” – where an estimated $500 billion worth of fixed-rate mortgages will expire by Easter and switch to a more expensive variable-rate loan structure. Morningstar, which has $US239 billion under advice and management globally, likes emerging markets and in particular Chinese tech stocks like Ali Baba.
Mr Wacher is underweight materials because the prices of the big integrated miners are “getting a little stretched” despite possible high demand from China as the Asian giant re-opens its economy. He prefers Brazilian miners. He predicts company earnings will start to erode in the first half of the year because they will have to lower prices while facing higher costs from inflation and pay increases.
Growing up, Mr Wacher loved running and wanted to be a physiotherapist or a sports doctor – his father was a physician. For instance, Mr Wacher booked profits when he sold Alibaba Group shares bought around $HK60-$HK70 and currently trading around $HK116.
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