May 28, 2024

A person celebrates a successful parachute landing

A person celebrates a successful parachute landing
Photo: Denis Balibouse (Reuters)

The CEO of the hedge fund trying to buy Paramount thinks the United States economy has rounded a corner from its high-inflation days and is poised for smoother sailing.

“I think we’ve had a soft landing,” Marc Rowan told Yahoo Finance on the sidelines for the Milken Institute Global Conference. “When rates have gone up 400 basis points and the wheels haven’t come off the bus, as they say, I think that’s the definition of a soft landing.”

About two years ago, the Federal Reserve began lifting rates from near-zero amid persistently high inflation. The key federal funds target rate now sits at 5.5% after starting at 0.25%. Since then, industries from tech to real estate have struggled with waiting for inflation to get back down from its 2022 highs to the Fed’s preferred 2% print.

“It will take some time, but we will succeed and we will bring inflation back down to 2% and then people won’t have to worry about it again,” Fed Chairman Jay Powell told reporters at a press conference earlier this month. “That’s what we’re doing, and we know that it’s painful and inconvenient, but the dividends will be paid, will be very large and everyone will share in those dividends and we’ve made quite a lot of progress if you can think about it.”

Unemployment has remained low, GDP hasn’t slowed down too much, and stock markets are frequently hitting new record highs. Investors are confident that as soon as the right inflation reading comes along, cheaper money will be on its way.

But frustrations abound. Lackluster consumer confidence numbers tell another story, evidenced by what Snap-on CEO Nick Pinchuk told congregants at the tool company’s annual meeting last month:

As the financial numbers got better and the Fed started to get more under control, the financial community went up and the everyday community went down because other things happened. And it just comes down to what people pay attention to. If you’re on Wall Street, you’re paying attention to interest rates and how the market is and so on and what the narratives are. And you’re buoyed. You’re supported. You’re encouraged by the arithmetic calculations that those numbers show. On the street you just hear bad things and there are no quantitative numbers that will solve your problem.

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