With the economy set to slow down in a massive way after 10 consecutive months of interest rate rises, it pays to see which trends could remain resilient through this period.
The team at Firetrail had a couple of ideas: travel and gold.
Here are the two S&P/ASX 200 Index (ASX: XJO) shares from those thematics that Firetrail analysts are backing right now:
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Australians are dying to travel
One of the greatest ironies at the moment is that consumers are tightening their belts due to massive rises in their mortgage repayments, but they're still travelling.
"Post-COVID travellers could not care less about bank asset/liability mismanagement – they'll be at the beach bar!" read the Firetrail memo to clients.
"Air travel is surging and still has a way to go before reaching pre-COVID levels in most regions."
The analysts noted that the US has led the surge, with revenue per kilometre already back to 2019 levels.
"But Australia still has some ground to make up," read the memo.
"Strong demand and lighter competition in the Australian market has Qantas Airways Limited (ASX: QAN) — held in the Firetrail High Conviction and Firetrail Absolute Return Funds — reaping the rewards."
Indeed, the Qantas share price has stunningly risen more than 50% since July.
Despite the spectacular returns, the airline remains a darling among professional investors. According to CMC Markets, 12 out of 16 analysts currently rate the stock as a buy.
Eleven of those reckon it's a strong buy.
Gold buying spree will continue
For thousands of years, gold has always been seen as a "safe haven" investment during troubled times.
And it's no different this time around, reckon the Firetrail team.
"Recession fears and cracks in the banking system have led to a spike in the gold price from $1,650 to $1,919 in the past 6 months," read the memo.
"We think gold plays an important defensive role in portfolios."
In a separate note, Firetrail analysts noted that central banks are currently on a gold-buying spree.
"Despite a subdued first half of the year, 2022 central bank gold purchases were the highest on record with net purchases of 1,136 tonnes. 80% of this came in the second half of the year," they wrote in a Firetrail blog post.
"A recent World Gold Council survey suggests the momentum will continue. A quarter of central banks surveyed indicated that they expect to increase exposure to precious metals."
Among gold producers, Newcrest Mining Ltd (ASX: NCM) is the team's highest conviction pick.
"Gold miners with high-quality assets like Newcrest Mining are set to benefit from heightened uncertainty and a stronger gold price."
