The higher inflation narrative caught up with global markets in January this year. We look at some of the ways investors can position for the prospect of higher inflation (and interest rates) and examine some of the inflation beneficiaries.

Following results updates from all four major banks this month, we outline our case for why investors should be market weight the major banks and share the three core issues we believe investors will focus on over the next 6-12 months.

Despite a rising oil price environment, the performance of Australian energy stocks has been disappointing. We see an opportunity for the Australian energy sector to see a significant rerating by adopting a capital allocation strategy more akin to what the global oil majors have done.

February reporting season will have everything to talk about but little to show in terms of earnings growth, with the Omicron variant casting a shadow on the near-term earnings recovery. And while there is a lot of noise around the still lingering impacts of COVID-19, we remain optimistic that Australian earnings can still grow in 2022.

This week BHP will ask shareholders to vote on ending the company’s Dual Listed Company (DLC) structure that has been in place following the 2001 merger of BHP and Billiton. As Australian investors we are supportive of the move and see the benefits of collapsing the outdated structure currently outweighing the short-term costs. To give you the bigger picture we delve into the investment implications, benefits, disadvantages and market impacts of the unification plan.

The fading influence of the pandemic domestically over 2022 - along with reopening, consumer savings, corporate spending, and continued policy support - provide a constructive backdrop for Australian Equities. The prospect for a high single total return from equities over 2022 remains our central case. We explore three key themes we see for Australian Equities in 2022.

For West Australian (WA) exposed companies, COVID continues to have an oversized impact on profitability. While closed borders have contributed to good health outcomes in WA, the restrictions on people mobility have been a significant issue for companies with WA exposure. We explore the prospects of fortress WA reopening and assess the likelihood of whether earnings expectations in our basket of six WA exposed companies have bottomed ahead of the February results season.

Australian travel stocks have been beaten up over the past month over concerns around the pace of reopening and rising energy prices. The emergence of COVID variant Omicron as a potential threat to the travel recovery over the past week has taken the retreat in travel stocks to around 20% since mid-October. At this stage, it’s difficult to be too definitive around the ultimate impacts of Omicron on economies and economic reopening until more data is available - likely mid-December. As a result, travel-related stocks will remain price sensitive to news flow surrounding the Omicron threat. Against this backdrop we share our positive thesis for QANTAS.