We expect nominal inflation to remain persistently high, but we anticipate seeing the rate of change slow over the course of 2022. While high/rising inflation is harmful for growth in the economy, it is something of a self-righting mechanism for corporate investment levels and discretionary spending. Demand destruction in the face of higher prices is likely to address many areas of inflationary pressure, meaning that (less predictable) supply and input cost constraints should ease as the year progresses.


There are so many unknowns at present with COVID continuing to impact economies and supply chains, and the conflict in Ukraine adding to inflationary pressures (primarily energy and food). Expectations for growth have fallen, and the risk is that central banks could be too aggressive in their decisions on interest rates, adding to the risk of recession. Were that scenario to prove true, long/short strategies have tools to hand capable of generating a return for investors throughout the market cycle, regardless of corporate earnings. In that environment, the emphasis will land squarely on stock selection at a tactical and core level, conditions that we consider well-suited to equity long/short investing based on detailed company analysis and research.