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.

Macroeconomics

<ul><li>The December quarter National Accounts revealed that the nominal GDP expanded by 1.8% in 2015, which represents the worst calendar year outcome since 1992.  Even during the depths of the financial crisis, the nominal economy managed to expand by 2% in 2009.  The fact that nominal GDP has grown well below 4% pa since 2012 confirms that the economy has been stuck in an income recession for four consecutive years. It is little surprise that persistent weakness in consumer and business sentiment surveys during this time. </li><li>The National Accounts bear the ongoing effects of Australia's capex cliff, with private business investment detracting more than 1 percentage point from nominal GDP growth in 2015, while net exports detracted 1.5 percentage points.  In contrast, the interest sensitive sectors continue to support nominal GDP growth; household consumption and dwelling investment contributed more than 3 percentage points to growth.</li><li>As per Evidente's previous post <a href="https://www.smartkarma.com/insights/what-the-capex-cliff-means-for-australia-s-big-short" target="_blank" data-smartkarma-citation="insights:2853">What the Capex Cliff Means for Australia’s ‘Big Short’</a> , the capex cliff evident from the ABS survey of capex intentions suggests that the drag from private business investment should persist for the next 18 months.  Against this backdrop, the RBA will have little choice but to keep interest rates low for an extended period, and likely deliver two more rates over the course of this year.</li></ul>

The December quarter National Accounts revealed that the nominal GDP expanded by 1.8% in 2015, which represents the worst calendar year outcome since 1992.  Even during the depths of the financial crisis, the nominal economy managed to expand by 2% in 2009.  The fact that nominal GDP has grown well below 4% pa since 2012 confirms that the economy has been stuck in an income recession for four consecutive years. It is little surprise that persistent weakness in consumer and business sentiment surveys during this time. The National Accounts bear the ongoing effects of Australia's capex cliff, with private business investment detracting more than 1 percentage point from nominal GDP growth in 2015, while net exports detracted 1.5 percentage points.  In contrast, the interest sensitive sectors continue to support nominal GDP growth; household consumption and dwelling investment contributed more than 3 percentage points to growth.As per Evidente's previous post What the Capex Cliff Means for Australia’s ‘Big Short’ , the capex cliff evident from the ABS survey of capex intentions suggests that the drag from private business investment should persist for the next 18 months.  Against this backdrop, the RBA will have little choice but to keep interest rates low for an extended period, and likely deliver two more rates over the course of this year.

Look Through the Spin - The Australian Economy Remains Mired in an Income Recession