The entire current economic equilibrium is due to small wage increases

We will take the examples of the United States and the euro zone. In this expansion phase, the fall in the unemployment rate has caused a very limited acceleration in wages, the result being that unit labour costs have not accelerated and core inflation has been persistently low . As a result, the current economic equilibrium is completely different from those of the past at the same stage of the cycle: The low level of inflation leads to low in terest rates, in the short and long term; The result is low interest payments on debt, which maintains government solvency and improves corporate profitability; Given the small increases in labour costs, profitability can also remain strong, while in the past it fell at the end of expansion periods. Once investors understand the new nature of this equilibrium, which is mainly due to the "disappearance of Phillips curves", they will become far more optimistic about equities and corporate bonds.