Investment update Limits to growth Oil Banks China What next? Bernard Doyle Oil April 2016 www.jbwere.co.nz Banks China What next? Deflation

Strategy Update April 19 growth: why it matters

Growth: Medium term Forecasts… Strategy Update April 19 Growth: Medium term Forecasts…

Strategy Update April 19 …probably wrong, right?

Strategy Update April 19 Yes, but…

Leading to rising wages… Strategy Update April 19 Leading to rising wages… Wage growth gradually recovering

…and inflation Pick-up in Inflation is not a fluke Strategy Update April 19 …and inflation Pick-up in Inflation is not a fluke

Our view: Reality check coming Strategy Update April 19 Our view: Reality check coming

Less bang for buck post gfc? Strategy Update April 19 Less bang for buck post gfc?

Which will have implications for profitability… Strategy Update April 19 Which will have implications for profitability… Profit margins will decline as wage growth recovers

Strategy Update April 19 …and the equity cycle

Or are we measuring growth badly? Strategy Update April 19 Or are we measuring growth badly? GDP is not equipped to measure software improvements “You can see the computer age everywhere but in the productivity statistics” Robert Solow, 1987 Erik Brynjolfsson and Joo Hee Oh estimated in 2012 that the growth in time spent on free internet sites between 2007 and 2011 created incremental consumer surplus worth ¾% of GDP each year. Erik Brynjolfsson and Joo Hee Oh (2012), “The Attention Economy: Measuring the Value of Free Digital Services on the Internet,” Thirty-Third International Conference on Information Systems, Orlando, 2012

Wildcard: Middle classes are stirring Strategy Update April 19 Wildcard: Middle classes are stirring Middle class spending power is improving

Either way, interest rates should be higher Strategy Update April 19 Either way, interest rates should be higher

Strategy Update April 19 Opportunity: US Banks

Long run growth questions: automation Strategy Update April 19 Long run growth questions: automation

Long run growth questions: sharing Strategy Update April 19 Long run growth questions: sharing

Long run growth questions: fiscal sustainability Strategy Update April 19 Long run growth questions: fiscal sustainability

Long run growth questions: human capital Strategy Update April 19 Long run growth questions: human capital The University breakeven is rising

Opportunity: technology Strategy Update April 19 Opportunity: technology

Thank you

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