The markets initially reacted negatively about the investigation of Jerome Powell, but regained their footing in the afternoon. The markets are taking this as saber-rattling and largely ignoring it.
Politically, Trump is seeing bipartisan push-back and this probably goes nowhere.
Consumer inflation rose 0.3% MOM and 2.7% YOY in December, according to the BLS. Ex-food and energy, the index rose 0.2% MOM and 2.6% YOY. Shelter drove the increase, rising 0.4% MOM. Food was also a big driver rising 0.7%. The numbers were generally in line with expectations and shows inflation continuing to move to the Fed’s inflation target.
JP Morgan kicked off the fourth quarter earnings season with better-than-expected numbers. Revenues fell 1% QOQ but rose 7% YOY. EPS was down 9% QOQ and 4% YOY. Earnings were impacted by a reserve build for their purchase of the Apple credit card portfolio.
Mortgage origination volume rose 12% QOQ and 34% YOY to $19B. On the subject of the economy CEO Jamie Dimon said:
“The U.S. economy has remained resilient. While labor markets have softened, conditions do not appear to be worsening. Meanwhile, consumers continue to spend, and businesses generally remain healthy. These conditions could persist for some time, particularly with ongoing fiscal stimulus, the benefits of deregulation and the Fed’s recent monetary policy. However, as usual, we remain vigilant, and markets seem to underappreciate the potential hazards including from complex geopolitical conditions, the risk of sticky inflation and elevated asset prices.”
The stock is down about a percent pre-open.
The House passed the affordable HOMES Act, which aims to improve housing affordability by removing some restrictions on manufactured housing (things like energy standards will get set by HUD, not DOE). With homeownership so expensive, manufactured housing is one alternative to get people into affordable homes.
Home affordability remained tight in the fourth quarter, although it did improve slightly according to research from ATTOM. “Many Americans were priced out of buying a home in 2025, and affordability remains worse than historic norms in most markets,” said Rob Barber, CEO of ATTOM. “Still, modest, quarter-over-quarter affordability improvements in many markets at the end of the year offered some encouragement. Over the past five years, home price growth has nearly doubled wage growth, meaning home buying power in 2026 will depend not only on whether prices level off or decline, but also on mortgage rates and broader economic conditions.”
A buyer would have to earn $86,374 in the fourth quarter to keep the payment below 28% on the median home. In many MSAs especially in the Bay Area and NY City, a borrower needs to make in the mid $300k range.
