A Bad Moon Risin?

Wayne Strout at Seeking Alpha, makes a point. 

The present situation is dependent on continued low interest rates and continued belief that there is little chance of loss. It will change when one of four things happen:

1) It appears the central banks are going to “allow” interest rate to rise;

2) Market participants begin demanding higher interest because of higher costs;

3) Some geopolitical “shock” occurs that causes investors to fear loss; and/or

4) Corporate earnings begin to fall or stagnate and investors decide to take profits, en masse to avoid losses from falling stock values.

My take is that “official” inflation is reported to be low because wages are depressed.  I think central banks are focusing too much on the costs of labor and commodities—indicators of past cost-push inflation. They are under emphasizing other costs of doing business.  

I think that rising prices will occur due to the desire and need of public companies to increase profits and these rising prices will lead to a reduction in demand. I think we are already seeing this to some degree as evidenced by struggling retailers.

The Nattering One muses... We see scenario 4 as the most likely.  Although a strengthening dollar and declining commodity prices may offset, as retailers and stagflation forces attempt to raise prices, discretionary spending and demand will fall further, begetting lower corporate earnings and stock prices.

Any kind of rate increases would beget higher rates in: ARM resets, credit cards and mortgage rates. Further curtailing spending, demand, earnings and driving stock prices lower.

Above: Isn't it likely that a-lot of this class of unemployment is caused by this kind of unemployment?

All of this into the face of stagnant wages, weakening business conditions, and a slowing global economy. We see a bad moon risin