This bear market isn’t over until we tell you it is.

 

They spelled it out for us in yesterday’s minutes: "An unwarranted easing in financial conditions, especially if driven by a misperception by the public of the Committee’s reaction function, would complicate the Committee’s effort to restore price stability."   Translation: This bear market isn’t over until we tell you it is.   The Fed doesn’t want morale to improve until we’ve fired enough people — and the firing hasn’t even started.   But do we really have to lose our jobs to make the Fed happy? Let’s check the charts.

At just under 3.5%, US unemployment has ticked down to its lowest level since 1969!   Or cooling off? December average hourly earnings were up 4.6% YoY and 0.3% MoM. Would a 4.6% raise make you feel wealthy? Me, neither. But the Fed insists on worrying about the wealth effect.    It’s their last remaining reason to keep rates artificially high, and they’re going to stick to it until the bears come home. (Or is it the cows?)    Perfectly tepid? Average weekly hours are falling, an indication employers are dealing with the current slowdown by having employees work less instead of letting them go. That seems perfectly Goldilocks behavior to me.   The elusive soft landing in a photo:

No one believed Powell could engineer a soft landing. And maybe he hasn’t; maybe he’s just gotten lucky. But, with 223,000 jobs added this late in the cycle, we seem to be landing softly, indeed.