Productivity - A Key Contributor to U.S. Stock Performance

What causes one country's stock market to outperform others?  Over longer periods (more than five years), higher relative earnings growth is the primary driver.  Earnings are influenced by two main factors: revenue growth and profit margins.  Countries with higher GDP growth, or those fostering a culture that advances and supports innovation foster greater opportunities for growth.  Companies capable of generating demand where it previously did not exist (consider Apple for example) are well positioned to outperform.  This week our focus examines the relationship between productivity and markets.