One of the most interesting dynamics in the market right now is the fact that inflation is bubbling up. We’re seeing it through wage inflation. We’re seeing it through transportation costs going up. And we’re seeing it through tariffs. Look at the appliance market: washing machines are a lot more expensive since the steel tariffs than prior to that.

So the question that every investor should be asking is, Does my company have pricing power? If they do, we think they can maintain—if not grow—margins. If not, the record high margins that most companies are seeing are likely to go down, and that will significantly impact earnings growth rates. So pricing power is incredibly important, and many US companies have actually forgotten how to raise prices because they haven’t had to for so many years.

The sector that we’re most concerned about is the retail business, where you have vast numbers of low-wage workers. If $15-per-hour wages are implemented nationally, that will create some real margin pressure for most retailers.

Why can’t companies raise prices? You have some big consolidated retailers that actually are blocking consumer-staples companies from raising prices. Think about Amazon and Walmart and Target and Kroger’s. They’ve risen to a size in the US economy where they just can say no, and companies don’t have much alternative in terms of where they want to distribute. So getting around those big distributors is difficult.

I think we’re at the nine- or 10-year mark of this bull market cycle. So stocks aren’t as cheap as they were. Earnings are at all-time highs. Operating margins are close to all-time highs. So it’s not as easy to find companies.