Although Gregory notes that “earnings regularly beat” expectations, at the same time he states that the outlook for sales is less promising, given the continuing theme of “earnings beat, revenue miss” in recent quarters.

“In the aftermath of the financial crisis many smart economic scribes wrote that the ‘new normal’ would be low growth for which there would be no quick fix whatever the central banks threw at the situation. That prediction seems to be truer than ever today as recent economic data has been at best soggy and reporting companies talk of a very sluggish environment, particularly in manufacturing,” said Gregory.

“By focusing on a high level of capital discipline, company management has been able to drive high margins that have been sustained despite a lack of top-line growth and against all the expectations of the more pessimistic market commentators. Corporate debt has been massively reduced and now shareholders are starting to reap the rewards of this more disciplined environment,” said Gregory.

Gregory references Apple, as it was recently revealed that the US giant saw a profit drop in its first quarterly results – its first profit decline in ten years. However, Apple was able to appease shareholders with a 15 per cent rise in the ordinary dividend and a plan to buy back $100 billion of shares through 2015. As a result the stock price reaction divided investors between those who still want to invest in Apple for its innovation and growth prospects and those investors for whom the search for income has become more difficult and some would say more dangerous, as yields on sovereign bonds and high yield credit shrink to ever less appealing levels.

Gregory concludes that Psigma’s view of the world is that equities remain as the firm’s favoured asset class for the foreseeable future. This is not because Psigma sees a new era of global economic growth, but more because the firm expects the environment to remain challenging and hindered by "constant political dithering". In such an environment, Psigma expects companies to continue to grow their earnings at a rate that will continue to encourage dividend growth, share buy-backs and debt repayment, which are all supportive of long-term equity market valuations, said Gregory.