After decades lying dormant inflation has picked up dramatically in most major economies over the past 12 months. Australia has so far lagged this inflation surge, though we expect local inflation to accelerate significantly through the first half of this year. We look at what is driving the surge and whether it is transitory.

This year the risk-off environment for equities has hit small-cap equities harder than large caps. Global risk-off has been driven by twin threats of higher global interest rates compounded by the outbreak of conflict in Russia/Ukraine. But In our view, an opportunity is emerging in small caps particularly if concerns around interest rates and Russia/Ukraine were to ease.

The US Federal Reserve (the Fed) raised its official Fed Funds (cash) rate by 25 basis points last Wednesday. We examine the history of Fed hiking cycles for clues on how the market will respond.

We reiterate our positive stance on Aristocrat (ALL), James Hardie (JHX), and SEEK (SEK). In our view, all three companies provide long-term structural growth qualities which are presently being discounted by the market.

With the significant flattening of the yield curve in recent weeks we delve into the historical link between the shape of the curve and US recessions.

This week we share six charts we are watching right now on the Australian equity market. The outlook for the Australian equity market in isolation remains quite encouraging, despite the current geopolitical tensions. Year to date, the Australian market is down -5% vs MSCI World index in A$ which has fallen -10%.

Markets remain on edge as Russia’s invasion of Ukraine combined with ongoing concerns around inflation and interest rates continue to create volatile conditions. While we have some tactical caution, we retain our constructive 12-month outlook for domestic (preferred) and global equities. Here we delve into the wall of worry.

Australian companies have delivered a reasonable reporting season against a highly uncertain operating backdrop. We look at what’s driving this performance and share the changes we’ve made to the Wilsons Advisory Australian Equity Focus List against this backdrop.