Report
Patrick Artus

Is the decoupling between the real economy and share prices a systematic feature of contemporary economies?

In OECD countries, growth is currently expected to be weakened in the wake of the COVID crisis. Yet share prices are already picking up sharply, i.e. there is a decoupling between the real economy and share prices. This could be a systematic reaction in contemporary economies. When there is a downturn in real activity, we see: A sharp fall in interest rates; Strong liquidity growth; A skewing of income distribution against wage earners that restores profitability, and therefore a rise in share prices. The consequences of rising share price at a time when the real economy is weakened are: First positive, due to the stimulation of demand and corporate investment through wealth effects; Then negative, due to the rise in wealth inequality.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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