Market Direction Mid Week Update

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Jamie Dimon in a interview today indicated he is bullish on the economy. He told, Yahoo Finance editor-in-chief Andy Serwer, there is a slew of ways the US economy has roared back since the great recession. He noted that employment was up, the housing market was recovering, and wages were starting to rise.

"The economy is going strong," he said. The good news is the American consumer isn't drowning in debt.

"The balance sheet of the American consumer is pretty good," Dimon said. He added that the ratio of income to the cost of servicing debt was at a 30-year low.

One of the big tailwinds that consumers have benefited from has been the plunge in gasoline prices. Dimon estimated that consumers were spending around 80% of those savings on things like travel and entertainment.

Dimon believes that better "rational policy" could bolster consumer confidence, igniting more spending and investment by consumers and businesses.

In December, the Federal Reserve hiked its benchmark interest rate by 0.25%, the first such rate hike since 2006. That event was followed my weeks of volatility in the global financial markets.

When asked if the Fed had made a mistake, Dimon dismissed the implication. "25 basis points is not a big deal and the economy is strong enough to justify more rate hikes. "I'm hoping you see another rate raise or two because the economy is going strong."

Dimon reiterated that these initial rate hikes are about ending the post-crisis, 7-year long era of ultra-low rates and easy monetary policy. "A normalizing economy is a very good thing," he said.

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