After a tough start to the year, global and Australian equities have bounced back sharply from their mid-June lows. In this week’s report, we explore what to make of the recent rebound in equity markets.

Debates over allocation decisions in equity portfolios tend to focus on growth versus value investment styles. “Quality” is often viewed as an additional consideration in the context of such strategies. But quality can also be an investment strategy in its own right, as we explore in this week’s report.

The global equity market has delivered decent but volatile returns over recent years, with strong rallies punctuated by some sharp pullbacks due to a variety of concerns. One of the key sub-plots has been the performance of growth versus value investment styles.

The prevailing market narrative appears to be shifting. While the inflation outlook remains on the minds of investors and central banks, the growth outlook is now arguably seen as the most significant source of risk.

Following last week’s hotter than feared inflation read, we explore whether inflation can be tamed without inducing a recession.

After a 25% national price rise from the 2020 COVID dip, Australian house prices are finally beginning to soften. While a significant correction seems likely a “crash” in our view is unlikely. We share our base case and view on house prices into 2023.

Despite market weakness this year US earnings have remained relatively resilient. We look at the earnings outlook and the implications for US equities.

With the US market experiencing a sharp performance reversal to start the year, we examine the history of significant “corrections” and “bear markets” to provide perspective around current market weakness.