20171206-NATIXIS-Productivity_gains_and_the__patience_theory__5页_734kb

Flash Economics Summary

Core Content

This document discusses the "patience theory" and its implications for productivity gains and financial markets, particularly focusing on long-term interest rates and equity valuations in OECD countries. The theory suggests that technological innovations, including those in the digital economy, take time to translate into measurable productivity improvements.

Main Points

Productivity Gains and the "Patience Theory"

• Overview: The "patience theory" posits that it takes time for new technologies and the digital economy to impact productivity gains.
• Historical Context: Past innovations, such as the steam engine and electric motor, required structural changes in industries before productivity improved.
• Current Situation: Despite advancements in new technologies and automation, productivity gains in OECD countries (United States, euro zone, United Kingdom, Japan) have continued to decline.

Key Data

• Chart 1: Shows the increase in NTIC (New Technology and Information and Communication) investment as a percentage of real GDP in OECD countries.
• Chart 2: Indicates a decline in per capita productivity.
• Chart 3: Demonstrates a slowdown in total factor productivity growth.
• Table 1: Reflects the increasing access to high-speed internet among businesses in OECD countries.
• Table 2: Shows a steady rise in the stock of industrial robots per 100 jobs in the manufacturing sector.

Implications for Financial Markets

• If the Patience Theory is Right:

  • Productivity gains and potential growth will increase in the future.
  • Long-term interest rates are too low, as they should reflect higher potential growth.
  • Equity valuations are justified due to expected future growth acceleration.

• If the Patience Theory is Wrong:

  • Productivity gains and potential growth will remain low.
  • Low long-term interest rates are appropriate.
  • Equity valuations are too high and may correct downwards.

Key Information

• Conclusion: Regardless of the validity of the patience theory, one of the financial markets (either equity or long-term interest rates) will experience a valuation anomaly.
• Market Correction: The document suggests that one market will undergo a correction based on whether the patience theory is accurate or not.

Disclaimer

• The document is intended for professional and qualified investors.
• It is confidential and not to be disclosed without prior written consent from Natixis.
• It does not constitute a financial analysis or personalized investment recommendation.
• It is based on public information and does not represent a formal approval or guarantee from Natixis.
• No liability is accepted for any use of the information contained in the document.
• The views expressed are those of the authors and may differ from one another.

Regulatory Information

• Supervision: Natixis is supervised by the European Central Bank (ECB), and authorized and regulated in various jurisdictions, including France, the UK, Germany, Spain, Italy, and Dubai.
• Legal Compliance: The document does not comply with legal requirements designed to promote the independence of investment research and is not intended for retail investors.

Final Note

• The document emphasizes the importance of understanding the relationship between technological innovation, productivity, and financial market valuations.
• It highlights the potential for market corrections based on the accuracy of the patience theory.