...“But in an inflationary world—and I’ll go into a second as to why we are an inflationary world and why we will stay there—in an inflationary world, rising interest rates are seldom enough to break the back of bull markets because the reality is, nominal growth tends to go up just as fast as interest rates. And so, if you have interest rates that move from 0% to 5% but nominal growth that moves from 2% to 7%, then with 7% nominal growth, companies, individuals, households can pay off their debt, and you don’t get into the bust phase of the cycle.
...nominal growth grew even faster and is still doing so. Why? Louis sees two drivers. First, the demographic labor shortage is raising wages for low-end workers with a propensity to spend most of it. This boosts demand for all kinds of products. The second factor is an unfolding boom in emerging markets—not just China. This is raising global demand for energy and natural resources.
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