Consumer and corporate confidence remains weak.

This is entirely unsurprising, given the material tightening of monetary policy, and the difficulties in planning that results from inflation.

On that last point, consider that inflation is a general rise in the price of a basket of goods, and, that creates winners and losers. Some will have raised prices by a lot, immediately, others by a little, more slowly, and everything in between.

Given that most people operate “under contract” this means sizeable swings in margins, and cashflows, depending on where you sit in the above spectrum of pricing and pricing power.

Prices can go up, but everybody still loses.

In general, the economy works best when businesses are not spending hours agonising over their pricing strategies, and holding back on investment due to uncertainty about where demand will sit in a year or two’s time.

So, we remain modestly underweight Australian shares, relative to international, and modestly overweight credit and fixed income, given yields have repriced, relecting the higher inflation, and, that credit exposures move us up the capital stack, relative to equities, which sit at the bottom.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

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