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Jamie Dimon, the chairman and CEO of J. P. Morgan Chase, said Thursday the current market volatility can be attributed to a variety of worries about political risk and oil prices, but the issue “that’s probably roiling the market the most is trade.”

“How bad is it going to get?” Dimon asked during an interview with CNBC’s Becky Quick. Dimon said traders, executives and other market watchers are trying to figure that out and are factoring it into their outlooks.

The U.S. economy is strong, Dimon said. Companies are hiring, consumers are spending, unemployment is down, he noted. But stocks have been volatile. On Thursday, they fell sharply and then tried to recover some of that ground in the afternoon. As of 2:25 p.m. ET, the Dow Jones Industrial Average was down 454 points.

The U.S. under the Trump administration has engaged in an escalating trade war with China, though the two sides are talking and set a 90 day time frame from Dec. 1 to get an agreement.

Dimon called it a trade “skirmish.” But it is forcing business leaders to find new supply lines, rethink investments or hold off on investments. “Those things are just causing uncertainty, which causes volatility.”

Dimon was in Washington along with the top executives of other large companies to attend the Business Roundtable’s CEO Innovation Summit. The head of the biggest U.S. bank was just elected chairman of the lobbying group for third year as executives face a the second half of President Donald Trump’s term.

Trump’s early policies, including tax cuts last year, have been seen as business friendly but there are challenges, such as the possibility of slowing economic growth and the effects of Trump’s tariffs on American companies.

Dimon says he doesn’t expect the U.S. and China to come to final terms on their trade negotiations in three months, but they should be able to make progress. He places the likelihood of an agreement at 60 percent but says there’s always a risk that something goes south. “That kind of uncertainty is just not good for markets.”

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Oil's recent price surge won't last, economists predict

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Sluggish global growth and an increase in U.S. output both signal the end of the recent rally in oil prices, economic research consultancy Capital Economics has suggested.

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US GDP grows by 3.2% in the first quarter

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The U.S. economy grew at a faster pace than expected in the first quarter and posted its best growth to start a year in six years.

First-quarter GDP expanded by 3.2% in the first quarter, the Bureau of Economic Analysis said in its initial read of the economy for that period. Economists polled by Dow Jones expected the U.S. economy increased by 2.5% in the first quarter. It was the first time since 2013 that first-quarter GDP topped 3%.

Exports rose 3.7% in the first quarter, while imports decreased by 3.7%. Economic growth also got a lift from strong investments in intellectual property products. Those investments expanded by 8.6%.

“The upside beat was helped by net trade (exports jumped while imports contracted sharply) and inventories which combined contributed almost 170 bps of the rise,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Personal spending though, the biggest component was up just 1.2%, two tenths more than expected as an increase in spending on services and nondurable goods offset a decline in spending on durable goods.”

Disposable personal income increased by 3%, while prices increased by 1.3% when excluding food and energy. Overall prices climbed by 0.8% in the first quarter.

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Trump tariff threat on autos could bring a German recession

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A trade war between the United States and Europe is coming and the fallout could tip Germany into recession, according to analysts at German lender Commerzbank.

EU leaders have now agreed to negotiate fresh trade arrangements with Washington but have restricted the talks to industrial goods only. That scope of debate is likely to irk President Donald Trump who is under pressure from Congress to win access to EU agriculture markets.

In February, Trump said he would impose tariffs on cars imported from the European Union if U.S. talks with the bloc can’t produce a new deal. The EU has since threatened to tax 20 billion euros ($22 billion) worth of U.S. goods.

Both sides have cautiously hung on to existing agreements, promising to take no action until talks are concluded.

In a research report Friday, analysts at Commerzbank said the chances of a trade deal that satisfied both European leaders and U.S. lawmakers looked slim. It noted that France, holding a powerful voice in the corridors of Brussels, had already erected a serious barrier.

“President (Emmanuel) Macron has already voted against opening negotiations with the U.S. because the U.S. is no longer participating in the 2015 Paris Climate Agreement,” noted Commerzbank.

The bank said on the other side of the ledger, U.S. Congress has made it clear that it will not rubberstamp any agreement that excludes agriculture — a tricky proposition given many EU nations fiercely protect prices paid to their farmers.

“It is therefore likely that Donald Trump will announce the imposition of duties — probably at rates of 25% — on imports of autos and auto parts from the EU,” said Commerzbank.

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