GDP contraction belies underlying strength in economy

Sam Ferraro

Global Founders Funds Management

The outright contraction in the September quarter real GDP belies underlying strength in the economy. Nominal GDP lifted by 0.5% and expanded by 3% in the year to the September quarter. The nominal economy - which is a more important barometer for stock investors - is gradually pulling out of a five year long income recession, assisted by higher commodity prices this year. The income recession has created a difficult environment for corporate profitability, with consensus 12mth forward EPS estimates for the ASX200 companies remaining around one-third lower than their pre-GFC peak. Consistent with the recent re-bound in global commodity prices and nominal GDP, forecast profitability appears to have bottomed in early 2016. (VIEW LINK)


Sam Ferraro
Senior Portfolio Manager
Global Founders Funds Management

Managing Director of Global Founders Funds Management, Sam has over 20 years experience in financial markets, with Merrill Lynch, JBWere and Goldman Sachs.

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