Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

Thematic (Sector/Industry)

Australia Financials / Thematic (Sector/Industry)

<p>In last week&rsquo;s post, I discussed a speech delivered by the RBA Governor in New York on April 21st (<em>The world economy and Australia</em>), in which he acknowledged that corporate Australia&rsquo;s capital restraint of recent years reflected the fact that the cost of capital or hurdle rates used in capital budgeting decisions had remained sticky.&nbsp; Despite the reduction in rates of return available on safe assets in Australia and globally, there has been an offsetting rise in the expected equity risk premium.&nbsp; A recurring question from portfolio managers that I spoke to last week related to the 'when' and 'what'; when will entrepreneurial risk appetite return and what indicators represent an accurate barometer of the risk premium?&nbsp; I believe that the labour market provides fertile ground because new cost discipline has extended to a reluctance by businesses to hire in recent years.&nbsp; I show that there is still considerable slack in the labour market and suggest that those waiting for an improvement in labour market conditions to signal a revival in animal spirits will need to be patient, particularly as the RBA appears to be more concerned about the growing risks from speculative activity in housing than the costs of rising unemployment and under-employment.</p>

In last week&rsquo;s post, I discussed a speech delivered by the RBA Governor in New York on April 21st (The world economy and Australia), in which he acknowledged that corporate Australia&rsquo;s capital restraint of recent years reflected the fact that the cost of capital or hurdle rates used in capital budgeting decisions had remained sticky.&nbsp; Despite the reduction in rates of return available on safe assets in Australia and globally, there has been an offsetting rise in the expected equity risk premium.&nbsp; A recurring question from portfolio managers that I spoke to last week related to the 'when' and 'what'; when will entrepreneurial risk appetite return and what indicators represent an accurate barometer of the risk premium?&nbsp; I believe that the labour market provides fertile ground because new cost discipline has extended to a reluctance by businesses to hire in recent years.&nbsp; I show that there is still considerable slack in the labour market and suggest that those waiting for an improvement in labour market conditions to signal a revival in animal spirits will need to be patient, particularly as the RBA appears to be more concerned about the growing risks from speculative activity in housing than the costs of rising unemployment and under-employment.

Beware of bubble talk, for now (Part II)