Trump Has a Problem With "HIS" Inflation with Chicken and Eggs on the Side

 By Andrew Ross SorkinRavi MattuBernhard WarnerSarah KesslerMichael J. de la MercedLauren Hirsch and Edmund Lee

 The New York Times

ImageA store shelf shows the price of a carton of 18 eggs at $13.49.

Egg prices are on an epic run, part of an inflation surge that could but the brakes on President Trump’s economic plans.Credit...Frederic J. Brown/Agence France-Presse — Getty Images

Just in: Lawyers for Elon Musk said he’d withdraw his $97.4 billion bid for control of OpenAI if the company halted its efforts to become a for-profit enterprise. More below.

Separately: You might recall that several years ago I wrote a series of columns, following a raft of mass shootings, that inspired the creation of a “merchant category code” for gun retailers so credit card companies could better identify suspicious activity the way they already did to help prevent money laundering and sex trafficking.

Well, this week Representative Riley Moore, Republican of West Virginia, introduced a bill to make it illegal for credit card companies to require “merchant category codes that distinguish a firearms retailer from general-merchandise retailer.” That means gun retailers would be able to mask what they sell. What do you think of what’s happening?

Scrambling Trump’s economic plans

President Trump inherited a strong economy with booming labor and stock markets. But one economic holdover could tie his hands: stubbornly strong inflation. 

Investors are already getting antsy, with stock markets briefly plunging and the bond market suffering its worst day of the year so far after unexpectedly worrying revelations in the latest Consumer Price Index report. It raises questions about what options the White House and Fed would have to maneuver if prices continued to rise.

The latest: The C.P.I. data showed headline prices over the past three months running at an annualized pace of 4.5 percent — well above the central bank’s 2 percent target.

The yield on 10-year Treasury notes, which tend to underpin mortgage and credit card rates, spiked nearly a tenth of a percentage point following the release. (They’ve eased slightly this on Thursday.) Analysts have warned that the bond market could act as a brake on some of Trump’s policy ideas.

Not surprisingly, Trump has blamed resurgent inflation on his predecessor, Joe Biden.

But Trump will have to contend with a new inflation wild card: bird flu. Wednesday’s inflation report showed that the disease has hit the grocery aisles hard, sending egg prices up a staggering 15.2 percent in the past four weeks after a large-sale cull of the nation’s chickens.

The rise in egg prices is “the largest increase in roughly a decade and pushing annual prices up 53 percent,” Jeffrey Roach, chief economist at LPL Financial, wrote on Wednesday in a research note. 

Persistent inflation could spoil Trump’s economic plans, which include tax cuts, an immigration crackdown and tariffs. Those policies “could all add to inflation as their effects ripple through the economy, causing the Fed to keep interest rates higher than they would have been under the status quo,” Bill Adams, the chief economist for Comerica Bank, wrote in a client note on Wednesday.

Trump’s desire for lower interest rates, which he called for again on Wednesday just before the C.P.I. report, is also at odds with most market watchers.

What will Jay Powell do? The Fed chair cited high inflation on Wednesday in saying that the central bank wants “to keep policy restrictive for now.” Powell sidestepped questions from lawmakers about Trump’s demand for lower rates and repeated that data would determine the Fed’s next move, a stance that’s bound to aggravate the president.

The odds of additional rate cuts have fallen significantly in the past week, with futures traders on Thursday seeing just one cut this year. “The Fed should stay on hold,” Aditya Bhave, an economist at Bank of America, told CNBC.