GDP contraction belies underlying strength in economy

Sam Ferraro

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

Founder of Evidente, Salvatore Ferraro, is a top rated quantitative analyst and has over 17 years of experience in financial markets, with investment banks, Goldman Sachs and Merrill Lynch, providing advice on best practice to portfolio managers...


No areas of expertise


Please sign in to comment on this wire.