CPI falls in December, Goldman Sachs (GS) reports weak profits and investigation begins into Fiat Chrysler (FCAU) for Cherokee fire

Bourbon & Bayonets / Friday, January 16th, 2015

Markets were heading higher on Friday after the Consumer Price Index reading came in on par with expectations. The Labor Department announced that their CPI dropped 0.4% in December, which notes the largest drop for the index since December 2008. During the last 12-months, CPI grew 0.8%. This is the slowest yearly growth since October 2009. Despite the seemingly weak data, it was in line with economists’ expectations. This data leaves many to believe the Fed will not be imposing a rate hike anytime soon. Michelle Girard, chief economist at RBS, said, “The odds of a rate hike in June are fading fast. The recent data cannot leave the Fed feeling more confident that inflation will move higher.”

Shares of The Goldman Sachs Group, Inc. (GS) were sinking after the company reported weaker profits that were affected by lower fixed-income trading. They said that there was a 7% decline in fourth-quarter profits. The largest drop for the company was in fixed-income trading, which dropped 19%. This has been a moneymaker for the bank. This portion of trading has come under stricter guidelines following the financial crisis. During the last quarter of the year, the banking giant earned $2.17 billion, or $4.38 per share. This was down from the $2.33 billion, or $4.60 per share a year earlier. Their data still beat out analysts’ projections of $4.32 per share. Total revenue came in at $7.69 billion. Chairman and Chief Executive, Lloyd Blankfein, said, “We are pleased with our performance during a year characterized by mixed global economic and financial conditions.”

Shares of Fiat Chrysler Automobiles (FCAU) were trading up over 2% after an investigation began into 2015 Jeep Cherokee’s surrounding fire complaints. There are an estimated 50,415 Jeep Cherokee’s that are expected to be affected if they find a problem. The National Highway Traffic Safety Administration reported that they have started an investigation into the 2015 models. The cause of the investigation was a complaint of a Jeep being “engulfed in flames approximately 20 feet high within seconds of parking the vehicle.” There was another complaint that the owner of a new Jeep had noticed smoke under the hood. No injuries have been reported. Eric Maybe, a spokesman for Fiat Chrysler, said, “We are aware of this incident and our investigators are cooperating fully with NHTSA’s preliminary evaluation.”

That’s all for today,

Warren Gates, Normandy Research

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