I have never been in a hot air balloon, but I hear it’s a pretty peaceful experience provided that the pilot knows what they’re doing. Don’t google “hot air balloon accident” though if you ever plan to take a ride.
In a hot air balloon, the pilot can control the altitude of the balloon but not the direction of travel. You flame up the burner and you rise higher. When the air inside the balloon cools, you go down. So to pull off a soft landing, you need to have serviceable equipment, sufficient fuel, and an understanding of local geography, air current patterns and present weather conditions. You don’t want to be traveling with a high ground speed when you touch down, and you ideally want to land on a flat surface.
Orchestrating the “soft landing” of the world’s largest economy from the dangers of elevated inflation is much more simple. No need to worry about wind and flames and power lines; you just hike rates and lower rates. 3/4% here, 1/4% there; NBD.
Today’s Employment Report exemplifies the efficacy with which the FOMC has managed efforts in the current de-ascension cycle. Those who want to work can find a job, and the cost of businesses to employ is abating. Some details if you care: The Unemployment Rate dropped to 3.5% from 3.6% last month, the Labor Force Participation Rate ticks up to 62.3%, and the Hourly Earnings have risen 4.6% YOY compared to November’s 4.8%. There were also 32K fewer jobs created compared to last month. See? Running an economy is easy peasy!
The stock markets closed up just over 2% today, and interest rates are moving toward the lower end of the current range. The negative 2/10 spread is also narrowing today, suggesting a normalizing economy. [The 10 Year Treasury Note has fallen 0.16% to 3.55%. The 2 Year declined 0.19% today to 4.26%, making the difference between the two indices -0.71% (and now you know that that means)]. In a healthy environment, the 2 Year is less than the 10 Year yield and there is a positive spread. We’re still a ways off from rate cuts from the Fed, and will most likely see a 1/4% bump in February to kick off 2023.
