STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
STEPHANE GARELLI
PROFESSOR AT IMD AND AT THE UNIVERSITY OF LAUSANNE, SWITZERLAND,
FOUNDER WORLD COMPETITIVENESS CENTER
THE WORLD IN RESET MODE
AN ECONOMIC OUTLOOK FOR 2017, AND BEYOND
2017…
TRONDHEIM
21 SEPTEMBER
2017
L
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
+1.8% +3.7%
+2.1%
+0.3%
+0.9% +0.3% -8.8%
IS IT A RECOVERY? GDP GROWTH
12 MONTH PERIOD
Q2
Q1
+6.9% +2.0%
+6.7%
+5.8%
+5.0%
+2.7%
+2.9%
+2.1%
+2.2%
+1.8%
+3.1%
+1.7%
+1.5%
+2.1%
+2.5%
+1.1%
+3.3%
+1.0% 0.2%
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
INFLATION: UP AND DOWN?
2% 2%
1.2%
1.7%
1.3% 1.5% 1.8%
2.6%
1.7%
INFLATION IS PAYING
30 euros FOR A HAIRCUT
WHICH USED TO COST
20 euros
WHEN YOU HAD HAIR…
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
A STRANGE ADVICE?
“PLEASE
DON’T CONFUSE
ME
WITH FACTS!”
Anonymous banker…
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
SOFT DATA (STOCK MARKET)?
“ANIMAL SPIRITS?”
US$7bn US$151bn
REVENUES
MARKET CAPITALIZATION
US$61bn US$45bn
PRODUCTION(cars)
76,000 6.7m
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
EXPECTATIONS, EXPECTATIONS…
GROWTH AND INCOME SHARE PRICE
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
GDP ACCOUNTS ONLY MONETIZED TRANSACTIONS…
JOHN MAYNARD KEYNES,
1883 - 1946
SUCCESSFUL
INVESTING
IS ANTICIPATING
THE ANTICIPATIONS
OF OTHERS
THE ADVICE OF KEYNES…
FORECASTING
THE ECONOMY
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
BUDGET
POLICIES MONETARY
POLICIES
“DO WE HAVE MONEY OR NOT…?”
POLICY MIX
CASH RICH – INVESTMENT POOR?
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
A REAL PROBLEM
UNEMPLOYMENT
OF LABOUR
UNEMPLOYMENT
OF MONEY
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
WHAT ABOUT CENTRAL BANKS?
TOTAL BALANCE SHEETS: 9 CENTRAL BANKS
2003 2008 2016
$B
ILL
ION
$3,560BN
PLEASE WAIT
YOUR DOLLARS
ARE PRINTED!
$17,650BN
$7,580BN
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
SOVEREIGN WEALTH FUNDS
$813BN
CHINA INVEST.
CORPORATION
$441BN
SAFE INVEST.
COMPANY
$456BN
HKMA
$828BN
ABU DHABI
INVEST. AUTHOR.
$524BN
KUWAIT INVEST.
AUTHOR.
$514BN
SAMA
$320BN
QATAR INVEST
AUTHOR. $359BN
GOVT. INVEST.
CORP.
$998BN
GOVT. PENSION
FUND
9 SOVEREIGN WEATH FUNDS
$5’177bn
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
CASH AND EQUIVALENT
$1.700BN
$1.300BN
$5.500BN
Listed companies 2017 (Bloomberg estimates)
$2.100BN
COMPANIES HAVE MONEY…
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
PEOPLE HOARDING CASH?
$2.4m
BRIEFCASE UNDER YOUR BED
$100.6m
YOUR HOTEL ROOM
$11.900m
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
THE BLUEPRINT
DEFENSE SPENDING: + 10%
CUT CORPORATE TAXES: 15%
INVESTMENT IN
INFRASTRUCTURE: $550bn - $1000bn
DEREGULATE: BANKS - ADMINISTRATION
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
BORDER ADJUSTMENT
- NO TAX ON EXPORTS
- NO DEDUCTION IMPORTS
BRING PROFITS BACK
8.75% RESHORING CASH
FULL EXPENSING ONE YEAR WRITE-OFF CAPEX
NO INTEREST DEDUCTIBLE ON LOANS
CORPORATE TAX RATE:
35% 15%
THE NEW PROPOSED TAX CODE
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
50 US COMPANIES = $1,100bn 5 US TECH COMPANIES = $504bn
$256BN $111BN $70BN $61BN $52BN
93% of
Cash
abroad
90% of
Cash
abroad
58% of
Cash
abroad
+$1.3tn
BRINGING THE MONEY BACK HOME…
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
- TERRITORIAL REPORTING
- PEER REVIEW
- EQUALITY OF TREATMENT
- TRANSPARENCY
BUT: NO TAX RATES
HARMONIZATION!
PRINCIPLES BEHIND THE GLOBAL TAX REFORM
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
THE VOLKER RULE:
297, 000 WORDS
THE DODD-FRANK ACT AT STAKE? (7,000 Rules)
NEW TESTAMENT:
181,253 WORDS
600 REGULATIONS
= $743bn
Source: The Trump Administration
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
3.6% WORLD-WIDE =
Investment as a % of PIB INFRASTRUCTURE SPENDING
8.5%
5.2%
2.6%
1.2%
3.7% 2.1% 2.0% 1.8%
4.4% 3.9%
2.4%
STREETS, SEWER, WATER, POWER…
24 – 29 YEARS OLD
Source: BEA, 2015
GLOBAL NEED = $3.7tn
INVESTED = $2.7tn
GAP = $1.0tn Annually
Source: World Bank, McKinsey Global Institute, 2016
= 3.7%
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
AT WHAT COST?
DEBT?
TRUMP’S PROGRAM
$7.4tn US FEDERAL DEBT
$19.9tn
(101% of GDP)
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
“I AM THE KING OF DEBT,
I DO LOVE DEBT,
7 MAY 2016
I LOVE PLAYING WITH IT…”
DOES THE PRESIDENT WORRY?
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
THE BREXIT AGENDA
1. THE WITHDRAWAL (June – Dec. 2017)
• EXIT BILL (55bn?)
• CITIZEN RIGHTS
• IRELAND
2. THE FUTURE RELATIONSHIP (Jan – June 2018)
• MARKET ACCESS
• FINANCIAL SERVICES
• DISPUTES?
3. THE TRANSITION (July – Oct 2018)
• JURIDICTION
• FREE MOVEMENT
• AGENCIES
4. RATIFICATION (Nov 2018 – March 2019)
759 AGREEMENTS WITH 168 COUNTRIES
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
OIL PRICE: CONFLICTING FORCES…
OPEC /RUSSIA
Production deal
ECONOMIC
RECOVERY
DISCOVERIES? Lowest in 60y
174/450
US SHALE OIL
RENEWABLES
4.9 b/d
60% Capacity
Growth
STOCKS
278 days
50$
60$
70$
80$
90$
Source: Data International Energy Agency, 2017
PRICE PRESSURE ON OIL PRICE
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
GLOBALIZATION + CASH + TAX OPTIMIZATION
M&A AND CONSOLIDATION
$3,600bn (2016)
=
THE “MAGIC” FORMULA
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
A REVOLUTION IN CORPORATE OWNERSHIP
NEWCOMERS’GLOBALIZATION
EMERGING
ECONOMIES
COMPANIES
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
PRIVATE EQUITY FUND
$ 93 billion
MONEY-MARKET FUND
$165 billion
EVEN MORE MONEY…
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
AND NOW THE CENTRAL BANKS?
buying shares…
$98bn (200 of 225 Nikkei shares)
$130bn (50% in the US)
PRINTING….
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
ALAN GREENSPAN
1926 -
“IF I SEEM
UNDULY
CLEAR TO YOU…
YOU MUST HAVE
MISUNDERSTOOD
WHAT I SAID“
IN FULL TRANSPARENCY?
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
WHO IS DOING WHAT?
ELECTRONIC PAYMENT
CLOUD COMPUTING
ADVERTISING
BATTERIES
WATCHES
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
ROBOTS OUTPERFORMING HUMANS?
1997:
DEEP BLUE (IBM) - CHESS
2016:
ALPHAGO (GOOGLE) – GO
2017:
LIBRATUS - POKER
ASSEMBLING,
TRANSPORTATION,
HEALTH,
AGRICULTURE,
FINANCE, TAXATION,
TRANSLATION, etc.
JOBS
“TAX THEM”
BILL GATES WHAT IS A ROBOT?
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
ARE HUMAN VULNERABLE?
SLOW
BIOLOGICAL EVOLUTION FAST
RE-PROGRAMING
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
“WE ARE LOOKING FOR SOMEONE WITH YOUR EXACT QUALIFICATION…
BUT A ROBOT VERSION!
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
ARE ROBOT VULNERABLE?
COMPETENCE
ULTIMATE WEAPON
COMPREHENSION
IS NOT
UNPLUG!
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
A NEW PARADIGM FOR
OFFSHORING
CHEAP
MAN-POWER
CHEAP
BRAIN-POWER
CHEAP
MACHINE – BRAIN
POWER
AI =
DATA-DRIVEN
LEARNING MACHINES
ONSHORING? COMPANIES
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
THE IMPACT ON JOBS
OFFSHORING
BLUE COLLAR JOBS
ONSHORING
WHITE COLLAR JOBS
SOCIAL
UNREST
EARLY
DE-
INDUSTRIALIZATION
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
STILL A “NO ACCESS” WORLD
11%
NO
ACCESS TO CLEAN WATER
NO
ELECTRICTY
15%
39%
NO
BANK ACCOUNT
20%
NO
IDENTITY
7.5bn
55% NO INTERNET
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
“MEISM”
REALISATION DE SOI
et
“Narcissisme…”
THE “SELFIEs”
GENERATION
“MEISM” Self
Fulfillment
and
“Narcissism…”
UNDERSTANDING MILLENIALS (age 18-35)
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
ESCAPING REALITY… Time spent
with a screen
SMARTPHONE
TV
PC
TABLET
Source: Nielsen Audience Report, 2016
10 HOURS, 39 MINUTES.
SLEEPING
-7H.30 CONFRONTING
REALITY:
6
HOURS per day
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
UNDERSTANDING MILLENIALS (age 18-35)
LITTLE
AFFILIATION Political, Religious…
“MEISM”
REALISATION DE SOI
et
“Narcissisme…”
“MEISM” Self
Fulfillment
and
“Narcissism…”
CONCERNED
State of the World
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
“WE HAVE A GENERATIONAL CHALLENGE:
NOT ONLY
TO CREATE NEW JOBS,
BUT TO CREATE
A RENEWED SENSE OF PURPOSE,
NOT ONLY FOR YOURSELF,
BUT ALSO FOR OTHERS!”
MARK ZUCKERBERG
1984 -
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
UNDERSTANDING MILLENIALS (age 18-35)
LITTLE
AFFILIATION Political, Religious…
“MEISM”
REALISATION DE SOI
et
“Narcissisme…”
“MEISM”
Self
Fulfillment
and
“Narcissism…”
CONCERNED
State of the World
ENTITLEMENT
Demanding
And
Intrusive
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
MARK TWAIN, 1835 - 1910
“NEVER
DO WRONG,
ESPECIALLY
WHEN SOMEBODY
IS
LOOKING! “
A SENSE OF TRANSPARENCY?
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
OWNERSHIP (SHARING)
UNDERSTANDING MILLENIALS (age 18-35)
ENTITLEMENT
Demanding
And
Intrusive
LITTLE
AFFILIATION Political, Religious…
MEISM
Self
Fulfillment
and
“Narcissism…
”
CONCERNED State of the World
“Free is Cool!”
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
THERE IS NO FREE LUNCH…
IF YOU THINK THAT A PRODUCT IS FREE
TIM COOK, CEO APPLE
THEN YOU ARE THE PRODUCT!
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
A NEW FAUSTIAN BARGAIN?
IF IT IS FREE…
THEN YOU CAN HAVE ALL THE INFORMATION ON MY
PRIVATE LIFE
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
“HOW CAN I TRUST YOUR INFORMATION WHEN YOU ARE USING…
SUCH AN OUTDATED TECHNOLOGY!
MILLENIALS LEAD THEIR PARENTS
33% OF USERS ARE OLDER THAN 45 YEAR OLD
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
2 YEARS EXPERIENCE 45 YEARS OLD 50+
THE WAGE CURVE
Source: Hired company, 2017
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
CONSEQUENCE
PETER DRUCKER,
1909 - 2005
THAN
CHANGES
IN MANAGEMENT
TODAY,
CHANGES
IN SOCIETY
HAVE A DEEPER
IMPACT ON COMPANIES
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
MANAGING VALUES IN A COMPANY
WORK /
SUCCESS
COMPANY
ACHIEVEMENT
20s 65s
> 60 HOURS A WEEK
COMPANY ANIMALS
MOBILE
SUCCESS DRIVEN
FULLY DEDICATED
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
MANAGING VALUES IN A COMPANY
WORK /
SUCCESS
COMPANY
ACHIEVEMENT
WORK / LIFE
BALANCE
SOCIAL
ACHIEVEMENT
20s 65s
40 - 60 HOURS A WEEK
PERSONAL ACHIEVEMENT
MOBILE WITH A HOME BASE
WORK-LIFE BALANCE
STEPHANE GARELLI TRONDHEIM, 21 SEPTEMBER 2017
MANAGING VALUES IN A COMPANY
WORK /
SUCCESS
COMPANY
ACHIEVEMENT
WORK / LIFE
BALANCE
SOCIAL
ACHIEVEMENT
LIFE / LIFE
BALANCE
PERSONAL
ACHIEVEMENT
20s 65s
< 40 HOURS A WEEK
LIFE QUALITY
IMMOBILE
LIFE-LIFE BALANCE