It is possible to have rising share prices despite a slowdown in growth - Natixis

Analysts at Natixis see that equity investors' main concern is currently whether there could be an upswing in the equity market despite the slowdown in growth. They conclude that shares could rise even in the case of a slowdown. 

Key Quotes: 

"Is an economic slowdown without a falling equity market possible? For an economic slowdown not to trigger a decline in the equity market (which is equity investors’ main concern currently), the following conditions must be met: 

1. The long-term interest rate must remain lower than the growth rate, despite the contraction in growth (this will be the case in OECD Countries);
2. The low level of interest rates must drive investors to switch to equities (which we have seen since the start of 2019);
3. Despite the low unemployment level at the end of the expansion period, a small rise in unit labour costs must keep profitability strong (which is the case currently, with some concern about the case of the euro zone)."

"It is possible to have rising share prices despite a slowdown in growth. Since:
- Long-term interest rates remain markedly lower than the growth rate;
- The low level of long-term interest rates has since the start of 2019 attracted investors back into equities;
- Unit labour costs are hardly rising, which keeps profitability high despite the low unemployment level (there is some minor concern about Europe and Japan, but not the United States)."