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>Contrary to Evidente's expectations, the RBA left the Official Cash Rate unchanged at its November Board meeting.&nbsp; The&nbsp;RBA has adopted an easing bias, with the statement reading that&nbsp;'the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.'&nbsp; </li><li>The outlook for interest rates hinges on the RBA's tolerance for sub-trend growth.&nbsp; Despite the RBA's glass half full perspective, Evidente doesn't see much upside to the outlook for activity in the near term.&nbsp;&nbsp;The RBA missed a golden&nbsp;opportunity today to capitalise on the positive narrative that the low 3Q CPI print offered.&nbsp; But the central bank's easing bias suggests that the case for more monetary stimulus (at either&nbsp;the December or &nbsp;February Board meetings) remains compelling.</li><li>The Australian dollar jumped on the news and is trading at around 72 US cents.&nbsp; Despite this, it continues to trade well below fair value based on Evidente's currency model.</li></ul>

Contrary to Evidente's expectations, the RBA left the Official Cash Rate unchanged at its November Board meeting.&nbsp; The&nbsp;RBA has adopted an easing bias, with the statement reading that&nbsp;'the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.'&nbsp; The outlook for interest rates hinges on the RBA's tolerance for sub-trend growth.&nbsp; Despite the RBA's glass half full perspective, Evidente doesn't see much upside to the outlook for activity in the near term.&nbsp;&nbsp;The RBA missed a golden&nbsp;opportunity today to capitalise on the positive narrative that the low 3Q CPI print offered.&nbsp; But the central bank's easing bias suggests that the case for more monetary stimulus (at either&nbsp;the December or &nbsp;February Board meetings) remains compelling.The Australian dollar jumped on the news and is trading at around 72 US cents.&nbsp; Despite this, it continues to trade well below fair value based on Evidente's currency model.

RBA holds fire for now but adopts easing bias

FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

The smart money has decided there will be no rate cut today by the RBA and the AUD has firmed ahead of the announcement. But there are reasons for the RBA to put a cut back on the agenda and renewed price falls in its key commodity markets may encourage the RBA to re-instate a preference for a lower AUD.&nbsp; Strength in the AUD on a no cut announcement may be fleeting and it is likely to fall if the RBA inserts even a modest easing bias into the statement.

The smart money has decided there will be no rate cut today by the RBA and the AUD has firmed ahead of the announcement. But there are reasons for the RBA to put a cut back on the agenda and renewed price falls in its key commodity markets may encourage the RBA to re-instate a preference for a lower AUD.&nbsp; Strength in the AUD on a no cut announcement may be fleeting and it is likely to fall if the RBA inserts even a modest easing bias into the statement.

AmpGFX - Strength in the AUD may be fleeting

Equity Bottom-Up

iShares MSCI Australia / Equity Bottom-Up

<ul><li>The banks and supermarket retailers dominated financial market developments in Australia over the past week.&nbsp; Investors were disappointed by full year results from ANZ and NAB, with the stocks falling by 6-7% over the week, well below the 2% weekly decline in the ASX200.&nbsp; &nbsp;Evidente discusses (again) why the lift in capital requirements does not amount to higher input costs for the banks.&nbsp; Analysts have downgraded the sector&rsquo;s dividend outlook for a while now, due primarily to the fact that the majors are no longer receiving the big free kick of lower bad &amp; doubtful debt charges.&nbsp;</li><li>Woolworths was down 13% following another profit warning, while Wesfarmers was part of the collateral damage of what appears to be&nbsp;a renewed supermarket price war.&nbsp; With the new Woolworths Chairman having swept the slate clean, I suggest that the downside risk to Woolworths is limited.&nbsp; Renewed strong competition amongst grocery retailers augurs well for low inflation and lower interest rates.&nbsp; Evidente remains of the view that the RBA will deliver more monetary stimulus at the November board meeting on Melbourne Cup Day.</li></ul>

The banks and supermarket retailers dominated financial market developments in Australia over the past week.&nbsp; Investors were disappointed by full year results from ANZ and NAB, with the stocks falling by 6-7% over the week, well below the 2% weekly decline in the ASX200.&nbsp; &nbsp;Evidente discusses (again) why the lift in capital requirements does not amount to higher input costs for the banks.&nbsp; Analysts have downgraded the sector&rsquo;s dividend outlook for a while now, due primarily to the fact that the majors are no longer receiving the big free kick of lower bad &amp; doubtful debt charges.&nbsp;Woolworths was down 13% following another profit warning, while Wesfarmers was part of the collateral damage of what appears to be&nbsp;a renewed supermarket price war.&nbsp; With the new Woolworths Chairman having swept the slate clean, I suggest that the downside risk to Woolworths is limited.&nbsp; Renewed strong competition amongst grocery retailers augurs well for low inflation and lower interest rates.&nbsp; Evidente remains of the view that the RBA will deliver more monetary stimulus at the November board meeting on Melbourne Cup Day.

Weekly Impressions - Competition intensifies amongst banks and supermarket retailers

<ul><li>Earlier this month, I discussed five reasons why the RBA ought to deliver more stimulus at the next Board meeting in November. &nbsp;The benign 3Q CPI print &ndash; which showed that core inflation remains entrenched at the bottom end of the central bank&rsquo;s target range - confirms that the economy continues to suffer from deficient aggregate demand. &nbsp;</li><li>The benign CPI also suggests that A$ depreciation of recent years hasn&rsquo;t flowed through to higher retail prices; importers are clearly absorbing the lower dollar through lower profit margins. &nbsp;The central bank now has the smoking gun to deliver another rate cut on Melbourne Cup day; a positive narrative of persistently low inflation.</li></ul>

Earlier this month, I discussed five reasons why the RBA ought to deliver more stimulus at the next Board meeting in November. &nbsp;The benign 3Q CPI print &ndash; which showed that core inflation remains entrenched at the bottom end of the central bank&rsquo;s target range - confirms that the economy continues to suffer from deficient aggregate demand. &nbsp;The benign CPI also suggests that A$ depreciation of recent years hasn&rsquo;t flowed through to higher retail prices; importers are clearly absorbing the lower dollar through lower profit margins. &nbsp;The central bank now has the smoking gun to deliver another rate cut on Melbourne Cup day; a positive narrative of persistently low inflation.

<ul><li>The 3Q CPI &ndash; slated for release tomorrow &ndash; should confirm that core inflation will have posted an increase of a little above 2% from a year earlier, remaining anchored to the bottom end of the RBA&rsquo;s target range.&nbsp; Disinflation has been evident over the past year, with various measures of core inflation falling towards 2%.&nbsp; At this level, the inflation outlook should not pose a hurdle to further monetary stimulus, particularly at a time when private sector wages are growing at a record low.&nbsp;</li><li>The key items to watch in the CPI print are electricity and food.&nbsp; Evidente estimates that consumers in NSW and South Australia will have received electricity bill reductions of around 10% in the September quarter, thanks to recent determinations from the Australian Energy Regulator.</li></ul>

The 3Q CPI &ndash; slated for release tomorrow &ndash; should confirm that core inflation will have posted an increase of a little above 2% from a year earlier, remaining anchored to the bottom end of the RBA&rsquo;s target range.&nbsp; Disinflation has been evident over the past year, with various measures of core inflation falling towards 2%.&nbsp; At this level, the inflation outlook should not pose a hurdle to further monetary stimulus, particularly at a time when private sector wages are growing at a record low.&nbsp;The key items to watch in the CPI print are electricity and food.&nbsp; Evidente estimates that consumers in NSW and South Australia will have received electricity bill reductions of around 10% in the September quarter, thanks to recent determinations from the Australian Energy Regulator.

Australia 3Q CPI Preview: Food and electricity deflation set to intensify

Australia

iShares MSCI Australia ETF is an exchange-traded fund incorporated in the USA. The ETF tracks the performance of the MSCI Australia Index. The ETF holds predominantly large-cap stocks from Australian companies. The ETF weights the holdings using a market capitalization methodology and rebalances quarterly.

iShares MSCI Australia (EWA US)

RBA holds fire for now but adopts easing bias

Contrary to Evidente's expectations, the RBA left the Official Cash Rate unchanged at its November Board meeting. The RBA has adopted an easing...

Sam Ferraro

AmpGFX - Strength in the AUD may be fleeting

The smart money has decided there will be no rate cut today by the RBA and the AUD has firmed ahead of the announcement. But there are reasons for...

Greg Gibbs

Weekly Impressions - Competition intensifies amongst banks and supermarket retailers

The banks and supermarket retailers dominated financial market developments in Australia over the past week. Investors were disappointed by full...

Sam Ferraro

So Mr Stevens, What Are You Waiting For?

Earlier this month, I discussed five reasons why the RBA ought to deliver more stimulus at the next Board meeting in November. The benign 3Q CPI...

Sam Ferraro

Australia 3Q CPI Preview: Food and electricity deflation set to intensify

The 3Q CPI – slated for release tomorrow – should confirm that core inflation will have posted an increase of a little above 2% from a year...

Sam Ferraro