Oil prices surge to two-week winning streak as Iran supply fears grip markets
JP Morgan CEO Jamie Dimon is notorious for being grumpy, but this is the most optimistic that I can remember him being on the overall economic outlook. After announcing JP Morgan’s fourth quarter results, Dimon said, “The U.S. economy has remained resilient.” Dimon added, “While labor markets have softened, conditions do not appear to be worsening. Meanwhile, consumers continue to spend, and businesses generally remain healthy.”
The federal government shutdown distorted some of the data collection, so the December CPI is not expected to impede any Fed cuts. The Labor Department on Tuesday announced that the Consumer Price Index (CPI) in December rose 0.3% and 2.7% in the past 12 months. Excluding food and energy, the core CPI rose 0.2% and 2.6% in the past 12 months, which was better than economists’ consensus estimate of 0.3% and 2.7%, respectively. Food prices rose 0.7% in December, while gasoline prices declined 0.5%.
Owners’ equivalent rent (shelter costs) rose 0.3% in December and accounted for much of the CPI increase, but shelter costs are expected to cool in the upcoming months. On Wednesday, the Producer Price Index (PPI) and retail sales will be announced.
Speaking of the Fed, the potential threat to Fed independence has rattled the currency market, since the U.S. dollar sold off in the wake of the DOJ investigation news. Fed Chairman Jerome Powell revealed in an interview that the Fed has received a grand jury subpoena that could result in a criminal indictment. The DOJ investigation is about the billion-dollar construction project at the new Fed headquarters. Obviously, if Fed Chairman Powell is being investigated by the DOJ, it may be hard for Chairman Powell to do his job. So, the real question is, was the DOJ investigation intended to oust Chairman Powell?
President Trump will be announcing the new Fed Chairman this month, which is expected to be Kevin Hassett, who leads the Council of Economic Advisors. However, as I discussed on Navellier Market Buzz, President Trump will likely pick a good media window to make the new Fed Chairman announcement, since he needs to generate momentum for quick Senate confirmation.