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>In what was close to a line ball decision - according to market economists surveyed and Interbank Cash Rate Futures - the RBA Board cut the official cash rate (OCR) by 25 basis point cut to 1.75% at its May meeting.  Strong disinflationary forces evident in the March quarter CPI print would have tilted the central bank's view on the outlook for the economy and interest rates.   With the RBA Governor’s ten year term set to expire in September, Evidente believes Mr Stevens does not want to leave his legacy as the reluctant rate cutter while underlying inflation in Australia fell to a record low.   </li><li>Even with the overdue monetary stimulus delivered, Australia's cash rate of 1.75% remains well above other advanced economies.  A comparison of Australia and the United States helps put things in perspective.  Australia's annual core inflation rate is now lower than in the US, while the unemployment rate of 5.8% has been higher than the US for a while now.  But the cash rate is 150 basis points above the federal funds rate!</li><li>The economy is suffering from deficient demand and more monetary stimulus is necessary to revive animal spirits in the corporate sector.  A policy rate of 1.75% is too high given monetary developments across advanced economies and Australia's disinflation.  As long as the RBA and APRA are satisfied that lending standards for housing remain prudent, Evidente expects the central bank to deliver another rate cut this year, most likely in August.</li></ul>

In what was close to a line ball decision - according to market economists surveyed and Interbank Cash Rate Futures - the RBA Board cut the official cash rate (OCR) by 25 basis point cut to 1.75% at its May meeting.  Strong disinflationary forces evident in the March quarter CPI print would have tilted the central bank's view on the outlook for the economy and interest rates.   With the RBA Governor’s ten year term set to expire in September, Evidente believes Mr Stevens does not want to leave his legacy as the reluctant rate cutter while underlying inflation in Australia fell to a record low.   Even with the overdue monetary stimulus delivered, Australia's cash rate of 1.75% remains well above other advanced economies.  A comparison of Australia and the United States helps put things in perspective.  Australia's annual core inflation rate is now lower than in the US, while the unemployment rate of 5.8% has been higher than the US for a while now.  But the cash rate is 150 basis points above the federal funds rate!The economy is suffering from deficient demand and more monetary stimulus is necessary to revive animal spirits in the corporate sector.  A policy rate of 1.75% is too high given monetary developments across advanced economies and Australia's disinflation.  As long as the RBA and APRA are satisfied that lending standards for housing remain prudent, Evidente expects the central bank to deliver another rate cut this year, most likely in August.

The Reluctant Rate Cutter Reflects on His Legacy