December inflation came in this morning at 2.7%. So the trend of "just right" data coming out of the BLS continues, which supports the path of lower rates.
Also this morning, JP Morgan reported Q4 earnings. And on the earnings call, Jamie Dimon talked about the Fed's recent resumption of asset purchases.
Remember, the Fed made a third consecutive rate cut in December, and announced that they would start buying Treasuries again, in what they called "reserve management" (not QE).
They've since bought about $40 billion worth of Treasury bills.
Here's what Jamie Dimon said about the Fed's "not QE."
He said it adds liquidity to the system. He said that cash enters the banking system — it "shows up in wholesale deposits" (accounts held by large corporations and institutions). And he said it gets redeployed.
He said it's a tailwind for the economy.
Bottom line: Jamie Dimon is confirming that the new Fed program is much like the old Fed program.
It favors the banks (more capital, more lending, more spreads, more fees). It's fuel for corporate borrowing and deal-making.
And this flush of liquidity in the system tends to find its way into asset prices (stocks, real estate).
As Ben Bernanke once acknowledged, QE tends to make stocks go up.
