What strategy for equities?

Since the start of 2022, equity investors have been worried about tightening monetary policies and there has been a marked downward correction in equity markets. But we believe investors should remain bullish about equities for several reasons: Given the multiplication of their objectives, central banks cannot react strongly to inflation. The market’s scenario of real long-term interest rates remaining persistently negative is therefore reasonable, which is obviously positive for several reasons; Despite faster wage growth, income distribution is still skewed in favour of earnings. The consensus scenario of earnings per share growth remaining relatively rapid is therefore also reasonable; Cash holdings are still abnormally large, so the portfolio rotation from cash to equities is not over. However, in an environment of high commodity and transport prices, investors should prefer economic sectors where companies have pricing power. We attempt to identify these sectors.