Against a predicted backdrop of robust global growth and a significant re-acceleration to above-trend growth in Australia, we share our view and positioning on each of the key asset classes into 2022.

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.

The US market continues to defy the naysayers with another impressive year of performance. The S&P500 has risen 24% YTD total return (31% in A$), a return that is comfortably ahead of both the rest of world equities and our local market. Outperformance has been skewed toward the second half of the year, helped by strong performance from big cap US tech as well as a resurgent US$.

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.

The emergence of the Omicron COVID variant alongside a more hawkish pivot from the US Fed has raised uncertainty levels a notch as investors head toward year-end.

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.

With a surge in case numbers in Europe signaling the start of a potential 4th COVID wave and cases on the rise in the US we assess the economic and market impact, and assess how Australia is likely to comparatively fare.

We delve into the case for holding gold equities in inflationary-driven risk-off periods.

In periods where an acceleration in inflation drives the risk-off event - like the 1970/80s - physical gold proves to have even stronger diversification benefits vs equities. Better still, gold equities significantly outpace the physical gold price proving to be true portfolio diversifiers during periods of high inflation.