Historically, healthcare has been an all-weather sector, with stocks that can compound earnings over the cycle. The pandemic reversed this trend for the ASX 200 healthcare sector. Since April 2020, the ASX 200 is up 49%; the healthcare sector is flat. We think the next 12 months will be very different from the last, with vital signs improving for the sector.

The past month has been a better one for stock markets, at least by 2022 standards, with US and global equities managing a decent bounce from their mid-October cycle lows. In this week’s report, we consider the Fed’s role in the recent equity bounce and how expectations around Fed policy are likely to influence financial markets going forward.

The general insurance industry has been under pressure in recent years. However, we have a favourable outlook towards the sector at this point of the cycle as general insurers are poised to benefit from ongoing growth in premiums and a significant improvement in investment earnings. In this report, we detail our sector outlook and our key picks.

The FY23 budget deficit is now forecast to be a much smaller $37b (1.6% GDP) compared to the $78b predicted in the April pre-election fiscal update. However, the deficit begins to expand again in FY24 and stays stubbornly high. In this special report, our Investment Strategy Group and Planning Team share their views on the 2022 Federal Budget.

Dividends are a significant driver of returns for most Australian equity investors. We look for dividend-paying companies that can deliver growth year over year, continuously compounding cash flows each year. This is the template for companies we consider when thinking about income investing.

In the Focus Portfolio, we are exposed to a few thematics at present, including the one we will discuss in this note: the Global Reopening. Even though the ASX 200 hit its COVID trough more than 2 years ago, many post-COVID recovery stocks have yet to reach their full potential. We think this creates a significant opportunity that is still not fully appreciated by the market.

At its October board meeting, the Reserve Bank of Australia (RBA) surprised the money market and economists alike with a lower than expected 25 basis point (bp) increase, taking the official cash rate to 2.6%. In this note, we explore whether this partial pivot is likely to prove prudent or foolhardy.

The consumer staples sector is (considered) less risky and volatile, offering better downside protection to investors, however it does not provide the future return profiles we look for. In this report, we share our rationalisation for our underweight positioning on consumer staples.