Joining us is JP Morgan Asset Management, Chief Global Strategist, David Kelly. Oil prices weaker again, but I do wonder if they’re out of the woods, especially if the Treasury Secretary is talking about more restrictions to Iranian oil and how they’ve been able to sell it to places like China and bring in a lot of cash. Well, there is always a a potential for for a supply shock and I I think you know obviously the heightened tensions between the United States and Iran and Israel increase the risk of either our sanctions or perhaps activity by Iran in the Strait of Hormuz having an impact on on oil prices. But you know in some ways you know what you’re reporting about China is equally important. Chinese consumers are, you know, they lack confidence and that is slowing the Chinese economy down more than I think is is portrayed in those GDP numbers and that has an impact on total global consumption. So I’m not seeing that big growth in global commodity consumption which would you know push oil prices up to a permanently high level. So we’ve seen oil prices move up and you know they are relatively high levels right now. They could get pushed higher by some shock. But long longer term, over a year, two years, three years, unless we see more global economic growth, I don’t think we’ll see a permanently higher plateau in oil prices. So what? So what do you see as the the stock market’s next catalyst? Feels like we’re adjusting here to a new rate path or at least rate expectations from the Fed. We’re in earnings season, are the earnings going to justify these levels and and what comes next? I think the earnings season will be OK. I think what what the US economy is proving, and you can see this in the jobs report for March, it seems like a long time ago, but it seems like the economy can do very good economic growth with still a lot of wage restraint because of immigrants coming in and because workers in the United States are generally pretty passive in terms of demanding wage increases. Now what that should allow happen is we should see that that inflation decline begin to resume. We it’s sort of stalled out of the last six months or so but we can I think we will see it begin to decline some more and if inflation resumes a downward path, it may not be fast enough to to allow for a June rate cut. But I think they’re the rate cuts will come back on the table if that inflationary begins to come down some more. So I think that’s that’s the most important thing to look at is can we get a a further slide in inflation here Earnings I think will be will be good but I don’t think the markets really teeing off that. I think they’re really interested in, you know, what’s the rate environment going to be for markets in general. Why, why are you confident that inflation will continue? It’s it’s downtrend from here with the rising commodities with the same thing re acceleration in US growth including manufacturing going back above PMI, back above 50 expansion. Well growth’s OK. I know that the Atlanta Fed is at about 2.8% for the first quarter, but we’re lower than that. You know, housing starts numbers this morning. We’re a little on the weak side. We’re not so worried about the starts as the permits which were a little bit on the weak side. Retail sales look OK, but we still see the economy slowing down to about a 2% growth rate. And what’s interesting here is the growth in immigration seems to be having an impact on labor supply, which is allowing us to do that with lower inflation. So first of all, I don’t think you have that overheating. Second of all, if you actually look at the way inflation is calculated, there’s so much of it that’s in owner’s equivalent rent and in auto insurance, those two categories represent over 2/3 of the inflation that we actually saw in the month of March. On a year over year basis, that’s going to fade going forward almost certainly when you look at those numbers. So it’s very hard for the overall inflation to go up if those two big categories are coming down.
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