JPMorgan CEO Jamie Dimon on Inflation, Markets, Fed, China, India

Summary

Jamie Dimon, JP Morgan's CEO, discusses market conditions, inflation concerns, and the unpredictability of future economic trends in an interview at the Global Market Conference. He expresses worries about persistent inflation due to fiscal deficits and various inflationary forces, including the green economy and re-militarization. Dimon also touches on geopolitical tensions, emphasizing the importance of US engagement with China despite current conflicts. He highlights the bank's commitment to technology and global expansion, while also addressing regulatory challenges and the potential impact of political changes on the US economy.

Takeaways

• 📉 Jamie Dimon, CEO of JP Morgan, does not view the current market conditions as turbulent despite recent CPI data and market rallies.
• 💹 He believes that markets are predicting a soft landing, which is reflected in high stock prices and low credit spreads, but cautions that history has shown this may not always be the case.
• 🔍 Dimon pays less attention to monthly numbers and is more concerned about the future of inflation, which he thinks may not subside as expected due to various inflationary forces.
• 🌐 He identifies factors such as the green economy, re-militarization, infrastructure needs, trade restructuring, and fiscal deficits as potential drivers of future inflation.
• 📈 Dimon suggests that the surprise could be higher interest rates and inflation, which might slow down economic growth.
• 🤔 He expresses uncertainty about the Federal Reserve's next move, emphasizing the importance of following economic data and being patient in decision-making.
• 🌍 Dimon discusses the unpredictability of geopolitical situations, such as tensions between China and the US, and their potential impact on global markets.
• 🏦 On the topic of China, he advocates for engagement with the country, recognizing its importance and the need to address unfair trade practices.
• 📊 He highlights the importance of innovation and growth for countries, citing France's positive steps under President Macron as an example.
• 🏢 Dimon also touches on the banking sector's role in supporting various sectors, including cities, schools, states, hospitals, and climate initiatives.
• 💼 Regarding JP Morgan, he dismisses the impact of high-profile departures on the company's focus and operations, emphasizing stability and continued growth.

Q & A

What is Jamie Dimon's view on the current market situation?

Jamie Dimon does not consider the current market situation as turbulence. He describes the markets as healthy and predicts a soft landing, but also acknowledges that history has shown that such predictions can be wrong.

What does Jamie Dimon think about the future of inflation?

Jamie Dimon expresses concern about future inflation, citing large fiscal deficits and various factors such as the green economy, re-militarization, infrastructure requirements, and trade restructuring as potential drivers of inflation.

How does Jamie Dimon perceive the potential impact of geopolitical tensions on the economy?

He believes that geopolitical tensions could be a significant source of stress, particularly in terms of oil and gas prices and trade alliances. He also mentions the unpredictability of nuclear blackmail and its impact on relations with China.

What is Jamie Dimon's stance on the engagement with China?

Jamie Dimon supports the idea of America engaging with China competitively but deeply, emphasizing that China is not a natural enemy and that there are common interests such as climate, anti-nuclear proliferation, and anti-terrorism.

How does Jamie Dimon view the potential stress on real estate and leveraged companies?

He suggests that if rates remain higher and inflation doesn't subside, there could be stress in real estate and among leveraged companies, as well as in some areas of private credit.

What does Jamie Dimon think about the unpredictability of the economy?

Jamie Dimon considers unpredictability to be the norm throughout his life, citing various historical inflection points in the economy that were not predicted the year before they occurred.

What is Jamie Dimon's opinion on the Trump administration's impact on the US economy?

Jamie Dimon states that the impact of the Trump administration on the US economy is unpredictable, and he emphasizes the importance of focusing on geopolitical situations rather than who is elected president.

What does Jamie Dimon see as the main issues with Basel III regulations?

Jamie Dimon criticizes Basel III as excessive and not well thought through, questioning the endgame and objectives of the regulations, especially regarding private and public credit.

How does Jamie Dimon view the potential for JPMorgan to grow in France?

Jamie Dimon is positive about the potential for growth in France, citing President Macron's pro-business policies, labor law reforms, and the country's focus on innovation as factors that could encourage expansion.

What is Jamie Dimon's perspective on India's economic future?

Jamie Dimon believes that India has a bright future and should be reached out to by the global community. He praises the changes India has made, such as infrastructure improvements and digital banking initiatives.

How does Jamie Dimon approach technology and innovation within JPMorgan?

Jamie Dimon emphasizes the importance of technology in every aspect of JPMorgan's operations. He mentions investments in AI, machine learning, and blockchain technologies to improve services and efficiency.

Outlines

00:00

📈 Market Turbulence and Inflation Concerns

Jamie Diamond, CEO of JP Morgan, discusses the current state of market turbulence, expressing that while markets have been healthy, he is concerned about future inflation. He mentions factors such as fiscal deficits, green economy, re-militarization, infrastructure needs, and trade restructuring that could lead to higher inflation. Diamond also talks about the unpredictability of economic events, referencing past market collapses and the importance of being prepared for various scenarios.

05:03

🏦 Geopolitical Stress and Bank Operations in China

The conversation shifts to geopolitical stress, particularly the impact on oil and gas prices and trade alliances. Diamond suggests that higher interest rates could be a surprise if inflation doesn't decrease as expected. He also addresses the bank's operations in China, acknowledging increased risk due to geopolitical tensions but emphasizing the importance of maintaining a presence to serve clients. Furthermore, he discusses the potential implications of the Trump administration on the US economy and the importance of American leadership in global economic alliances.

10:07

💼 Bank Growth, Technology, and Regulatory Concerns

Diamond speaks about the growth of JP Morgan, focusing on the expansion of technology, branches, and client base. He emphasizes the importance of digital services and AI, stating that while technology changes how banking services are delivered, the core functions remain the same. He also touches on the potential for acquisitions, stating that the bank is not actively seeking major acquisitions but is open to opportunities that align with their growth strategy.

15:09

🌍 Global Economic Outlook and Support for Growth

The final paragraph covers Diamond's views on the global economic outlook, with a focus on the potential for growth in countries like India. He expresses optimism about India's future and the importance of supporting their development. Additionally, he discusses the importance of growth strategies for countries to address debt and improve the lives of citizens. Diamond also shares his thoughts on the potential impact of a Trump presidency on banking regulations, expressing hope for a focus on growth and the well-being of the country.

Keywords

💡Market Turbulence

Market Turbulence refers to the fluctuations and unpredictability in the financial markets. In the video's context, Jamie Dimon, the CEO of JP Morgan, discusses the current state of the markets and indicates that while there is some concern, he wouldn't characterize the situation as turbulence. He mentions that markets have been 'healthy' for a while, with stock prices high and credit spreads low, which typically indicates stability. However, he also expresses a cautious outlook, suggesting that the future is not necessarily set to follow current market trends.

💡CPI Print

CPI, or Consumer Price Index, is a measure that examines the weighted average of prices of a basket of consumer goods and services, providing a data point on inflation. In the script, the mention of 'CPI print yesterday' refers to the recent release of inflation data. This data is significant because it can influence market behavior and economic policy, including decisions by central banks like the Federal Reserve on interest rates.

💡Soft Landing

A 'soft landing' in economic terms refers to a slowdown in economic growth that avoids a recession. It is a scenario where the economy cools without entering a contraction phase. In the transcript, the markets are said to be predicting a soft landing, as reflected in the high stock prices and low credit spreads. Jamie Dimon, however, expresses a more cautious view, suggesting that the future may not align with current market expectations.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. In the video, Jamie Dimon expresses concern about future inflation, citing factors such as large fiscal deficits, the green economy, re-militarization, infrastructure needs, and trade restructuring as potential drivers of inflation. He suggests that underlying inflation may not subside as expected and could lead to higher interest rates and slower growth.

💡Fiscal Deficits

A fiscal deficit occurs when a government's total expenditures exceed its total revenues. It is a key concept in the discussion about inflation, as large fiscal deficits can lead to increased money supply and, consequently, inflation. In the script, Dimon mentions fiscal deficits as one of the 'inflationary forces' that could keep inflation higher than expected.

💡Geopolitics

Geopolitics refers to the study of the effects of geography, economies, and political systems on international relations. In the video, geopolitics is identified as a potential source of stress in the markets, particularly in relation to oil and gas prices, trade alliances, and the unpredictability of global events such as the situation in Ukraine and Russia, and tensions with North Korea. These geopolitical tensions can influence economic policies and market behavior.

💡Stagflation

Stagflation is a term used to describe a situation where an economy experiences both stagnation (slow growth and high unemployment) and inflation at the same time. It is a challenging economic condition for policymakers to address. In the transcript, Jamie Dimon raises the possibility of stagflation as a surprise outcome if inflation doesn't go down and interest rates remain high.

💡Basel III

Basel III is a set of banking regulations developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007–08. It aims to strengthen bank capital requirements and improve risk management. In the script, Jamie Dimon expresses concerns about the impact of Basel III, suggesting that it may be excessive and not well thought through, potentially affecting the ability of banks to provide liquidity and credit to the economy.

💡Technology Investment

Technology investment refers to the allocation of resources into technological advancements and innovations within a company. In the video, Dimon highlights JP Morgan's commitment to investing in technology, including AI, machine learning, and blockchain, to improve services, efficiency, and client experiences. This investment is part of the bank's strategy to stay competitive and adapt to the changing landscape of banking.

💡Growth Strategy

A growth strategy is a long-term plan that outlines how a company intends to increase its sales, market share, and profitability. In the transcript, Jamie Dimon emphasizes the importance of a growth strategy for countries, suggesting that it is essential for economic health and beneficial for all citizens, including lower-income individuals. He advocates for pro-business policies, simpler regulations, and more capital investment as part of a growth strategy.

💡Regulations

Regulations are rules or directives made and maintained by an authority. In the context of the video, regulations pertain to the financial industry and are a topic of discussion due to their impact on banking operations and growth. Jamie Dimon expresses his unhappiness with the current volume of regulations and suggests that a focus on growth would be beneficial for the country and its citizens.

Highlights

Jamie Dimon discusses market conditions and the potential for market turbulence.

CPI print and market rally discussed, with a focus on whether the market is getting ahead of itself.

Dimon's perspective on the future of inflation and concerns about underlying inflationary forces.

Views on the potential for higher interest rates and their impact on growth.

Dimon's thoughts on the unpredictability of the economy and the importance of history as a guide.

Insights into the main stress points in the market, including geopolitics and inflation.

Dimon's opinion on the role of the Federal Reserve and the importance of following data.

Discussion on the potential for a 'soft landing' and the risks associated with market expectations.

Analysis of the impact of low rates and central bank policies on market optimism.

Dimon's views on the geopolitical situation, including tensions between the US, China, and Russia.

Opinions on the importance of American leadership and economic alliances in geopolitics.

Dimon's stance on engagement with China and the importance of competitive relations.

Discussion on the potential impact of the Trump administration on the US economy and unpredictability.

Dimon's comments on Basel III regulations and their potential impact on the banking industry.

Views on the importance of innovation and pro-business policies in France under President Macron.

Dimon's thoughts on the potential for India's growth and its role in global economics.

Insights into JPMorgan's focus on technology and AI, and their impact on banking services.

Dimon's reflections on the future of banking and the importance of adapting to technological advancements.

Transcripts

Definitely my highlight of the day. Jamie Diamond, a lot to talk about.

Jp morgan chair and chief executive, thank you so much for hosting us again

at your global market conference. What's market turbulence looking like

right now? So we have the CPI print yesterday

markets rally. Are they're getting ahead of themselves.

Yeah. So

I wouldn't call it turbulence. We've got we've had good healthy markets

for quite a while. You know, they kind of predicting a soft

landing and you see that in both stock prices, which are kind of high credit

spreads, which are kind of low market, is kind of wide open.

That's all good. Doesn't tell you the future is going to

be negative point. A lot of times in history where that was

true and the next year it wasn't true. And so, you know, we'll see.

I don't pay as much attention to monthly numbers as most people do.

I know. So what do you think the future is for

inflation? And I'm a little more worried about it.

I mean, you know, we've had very big fiscal deficits and, you know, I think

the underlying inflation may not go away the way people expect it to.

And I look at the future like a lot of things we look at are kind of

inflationary in the green economy, the re militarization of the world, the

infrastructure requirements, the restructuring of trade, fiscal deficits.

So I think there are a lot of inflationary forces in front of us that,

you know, may keep a little bit higher than people expect.

So the surprise would be rates are higher, inflation is a bit higher, and

maybe that will slow growth. And it obviously it's your policy.

It's a whole different issue that that can that could be determinative in what

our economy does next year. And we just we're just not going to

know. But does that mean you think it's 5050

whether the Fed cuts or hikes and, you know, next time around, next month, I

really don't pay that much attention. The Fed will have to follow the data.

And I don't know what the data is going to say.

But they I think, you know, they are doing the right to be patient right now.

So you see what's going to happen. They may not know for a couple of

months, but no big correction. I mean, if you don't pay that much

attention to it, it means you're not worried about it.

You know, I'm worried. I just said stocks are very high.

Either the chair's inflation is getting higher, rates going up or higher than

people think. So I think the change my view is

whatever the world is pricing in for a soft landing, I think it's probably have

that. I think the chance of going wrong is

higher than people think in the US, but globally

in the US. But also that could affect global.

Yeah. And so that what does that mean for

markets maybe down and credit spreads we've got gap out too.

Why is the market not pricing that in you know.

Not a happy talk. Where does that happy talk come from?

Low rates, central banks and reduced rates.

You know, maybe the geopolitical things disseminated don't cause problems.

And so, you know, the future isn't predictable like that.

So I you know, I'm a student of history. I've watched all the inflection points

go back. And my dad was a stockbroker.

I go back to the booming markets 72 and the collapse of 74, the healthy markets

of 80, the collapse of 82, you know, the 1987 market crash, the 1990 real estate

crash, the and almost all of them were not predicted the year before.

So I look at the factors that drive these things.

You're not always known as a company would prepare for all of this.

We can serve all our clients right regardless.

But what do you see as the main stress right now?

Because if it's geopolitics, we talk about it, it's just not really priced

in. We're just we're does is it distress?

Is it something actually going under that you worry about or just a multiple

factors coming in? Let's say?

I think geopolitics could create the main stress that we're worried about in

terms of oil and gas prices, our trade alliances.

But I think the surprise would be higher rates because inflation didn't go down

than inflation has been stubborn, maybe even bounces up next year.

I think inflation next year may be in the cards, may have nothing to do with

what you're seeing today. So, I mean, that to me is the surprise.

If you're at higher rates and, God forbid, stagflation.

Yeah, you'll see stress in real estate and leveraged companies and some private

credit and things like that. So is unpredictability the new normal?

I think it's been the norm my whole life, has it not?

Worse now know what happens between China and the US and what does that mean

for for your appetite of being China? Yeah.

So the geopolitical situation is very tense to work.

The Ukraine and Russia. I ran the terrorist activities in

Israel, North Korea, nuclear blackmail. We've never had nuclear blackmail

before. And this is, of course, affecting our

relations with China. And, you know, it's pretty hard of a

great relate to China is Ukraine war zone.

We're kind of in different sides of that and put put Taiwan aside.

Having said that, I think it's the right thing for America to fully and deeply

engage with China. You know, competitively, you know, every

nation is going to do it's in their own interest, national security.

So should America. We should define that fairly and

properly. It is unfair trade, you know, negotiate

that or do whatever you need to do. But engagement is the right thing to do.

China is not a natural enemy. The United States, they have a lot of

their own problems. So, you know, to me, we we can work

together as best we can and then we have common interests, climate, antinuclear,

perforation, anti terrorism. What does it mean for a bank working in

China actually, given all of this volatility and cautious?

I mean, you know, China you look at China from a risk of war, bases used to

be very good. It's not so good anymore because all

these things can go wrong. And remember, we bank I mean, I've got

the number, but 1500 multinationals in China, they're not leaving China to

ensure our clients there. We're just much more cognizant the risk

is higher. And I put Hong Kong in that bucket, too.

You know, we will look at China. Hong Kong is one at this point.

From a risk standpoint, what does the Trump administration mean for the US

economy? I don't know.

You know they're big. Why?

Because it's unpredictable or because we're too soon to actually try and

trying to figure out the policies that we put in place.

So if you look at history, who was elected president may not necessarily

affect the next year. That's kind of like we're a big tanker

and that's going to happen. I think the much more important thing is

what we do in the geopolitical situation.

You know, I've always been quite clear that American leadership is provided to

keep the world free and safe for democracy.

And that means economic alliances, which include trade, by the way.

I think we should spend more time in trade.

It means NAITO. It means that Russia should not win in

Ukraine because if they do, I think it could tear asunder this Western world.

I know you've ruled out being Treasury secretary.

Why? What would it take to get you into

politics? I don't think I'm suited for politics.

I love my job, you know, And so I'm not sure I want to do something like that.

And I can hope even if you got the call, you would it be hard to say no?

I don't know. I probably yes, I love my job and I have

no interest in leaving or doing anything else.

So we're in France at a global markets conference.

What are you expecting from Basel three? What would Jay Powell put in place?

New rule book, I should mention, by the way, because President Macron has done

an outstanding job here. Pro-business.

Got it. To move our trading floors here.

You know, he wants to grow his economy. There's much more innovation.

We had a thing last by innovation. So, look, Basel three, we've been quite

clear. We thought it was excessive, not well

thought through. I would love to know what the endgame

is. What are they trying to accomplish with

private credit? What are they trying to accomplish with

a given? The other day, 80% or more has left the

system and now the government is talking about having a bailout system for

mortgage companies because they're no longer the bank that has the ability to

provide liquidity in tough markets. Now, that would be the same thing in

market making. So they're looking at it.

You know, I trust Jay Powell to look at and analyze what they need to do.

How do you do the other thing, which I'm not sure, what do you think is the job?

I have no idea. And it may end up in a lawsuit or

something like that. But but the amazing thing to me is that

America ended up the end game, 30% more capital in the European bank in America.

And I just why we argue about international standards and then we

simply don't do them. And also, I think the regulation is the

question what do you want? How do you want the system to work?

Do you want it to be private credit and public credit?

Do you want mortgage out of the banks? Just dictate it.

That's the goal. Just dictated.

If you don't want leverage in the bank, just dictate it.

You know, I think, you know, we are guardians of the financial system.

You know, we bank we bank 100 countries. And, you know, we're on the ground in 60

countries, know we do great work for cities, schools, states, hospitals,

solar, wind, climate. Middle market companies.

Is that what they don't want? They do want you know, they want to make

it more X, but they know. Are they still trying to figure it out?

I think they've got to figure it out. I don't think it's quite clear from any

what they did. You guys should read it and write about

it. There was no detailed analysis about

cost benefit, what they're trying to accomplish, what the outcome would be.

And that's why we're asking you, right, Jamie?

Talking about France. So you're positive on the president?

Emmanuel Macron. I also know that you are the Choose

France event on Monday. If he relax labor laws, would you hire

more in this country? He did relax labor laws, but if he

relaxed more the possible you know, we have a thousand people here.

We have large trading floor is here with trade.

I've got number five or five or six or seven $8 million a day.

When you have a thousand people, you tend to hire more and more technology

more. And that's been true for us.

I've been to Jp morgan, which have a are very competent, good people and you have

hiring and capability and friends. You tend to do more things there.

So my view is we will be doing more things here.

And it was the tax law they put in place, the regulations they put in

place, the labor flexibility they put in place.

Those things do make a difference. And very importantly, they don't just

lift up JPMorgan here. We pay a lot of taxes here which help

lift up all citizens. I don't think President Macron did that

for JPMorgan. He did this.

He knows this country needs to grow, bring it innovation.

And that's how you that's how you build a better country.

So the chief executive of the largest wealth fund in the world says that

actually America is doing much better because Americans are less lazy or work

harder than the Europeans. I mean, is that fair?

Is that regulation? I hate total blanket statements like

that. I know a lot of Europeans who work hard,

but I think when you see the things that work hours, I think it is somewhat true

Americans are hard working Anywhere you go around America is hard working.

But I see that here, too, I don't think. And the innovation people meet the

challenges or the innovation people in the United States.

So you also in in terms of headcount in the UK, I think it's at the highest it's

ever been. And you're also doing you're giving

money to try and retrain. You have recently met with possibly the

next prime minister because he's so far advanced in the polls.

What do you think? Yeah, look, I like the fact that both

the Conservative and the Labor governments are talking about

pro-business, simpler regulations, getting more innovation, the country

becoming competitive. And we all need that.

We all have too much debt. Growth is the best anecdote for Antidote

for Everything. And so having a growth strategy is good

for a country and it's good for the lower income people.

And this training stuff is maybe the most important is good training jobs.

That first job is a first among the ladder creates dignity, you know, more

at home household formation. And I think countries have to do more of

that because if they don't, you know, you can have a tough time.

But do you think the UK economy will change under Labour?

I don't know yet, but I was I was happy with what they were talking about.

When you had Rachel Reeves come to a conference too, that they're all talking

from the playbook. We need growth, simpler regulations,

more capital formation, more capital investment in property taxation because

that's the way to help our whole country and our citizens.

So that is what we should all be doing. Jamie Dimon, we talk around, you know,

India all the time. Is this the decade for India?

And and does it somehow counterbalance China for, you know, world growth?

Yeah, look, I think India has done a very good job.

And, you know, you look at India, yes, it should have a very bright future.

I'm not saying as a counter to China, but a very bright future.

And I think we should all be reaching out to India.

You know, they have to stay non-aligned because the kind of where they are in

the world between Russia and China. But, you know, there are democracy,

there are natural friend of America and the Western world, and we should all be

helping them. And they they've made a lot of changes.

Their infrastructure transfer payments, seven or eight names,

your bank accounts that are going to be very good for their country.

So what does that mean for Jp morgan? Well, we're not we're not in the retail

business there, but we will you be in the we have 60,000 employees there.

We've got big campuses, high technology, and we're spending or trading or

research or investment banking. Yeah, we're there in a big time.

Can you talk to me a little bit about Jp morgan and how you mean you've had a

number of high profile departures. How does that change?

Actually, the way you focus your business and how you run things going

forward? Not at all.

Nothing. Zero.

If you were to buy anything, what would you buy?

Oh, that's different. We we look, we we have we can't buy

banks. You do know that.

So, you know, you could buy a European bank, could you?

I, I wouldn't even try. I think the American we like.

You hate it. I think the regulators.

You would hate it even if they said, go ahead and do it.

I'd probably be in court seeing things for a year and a half.

Here's a distraction. My own company, I'd rather just say we

want to add clients in this country and clients that will add bankers and

technology and branches. It's just a better way for us to grow.

Okay. But if there was if you could buy

anything, I mean, it's not a bank like you.

It. But you're thinking of something.

Yeah. We always look at stuff.

You know what? We're not looking at any major

acquisitions. I like that technology.

I think what we're doing, we're adding literally in Zurich, we have Investor

Day next week, we're adding retail and wholesale branches.

We're adding them in the United States, where almost all the major hundred

cities there are now, we're adding commercial banking all over Europe and

Asia. We're adding technology around payments

and even a blockchain called Onyx to move data and maybe move money one day.

We're constantly investing. We have 200 people, 2000 people, AI and

machine learning for each case is on the way too.

I know. So if I speak to you in five years, how

much bigger and how much do I probably be speaking to a fake diamond who's just

answering a question? Avatar and Avatar.

Yeah. Do you think about technology a lot?

Yes, all the time. Every meeting we have that's been true

my whole life. When we have any magic meeting.

Your technology is on the table. That includes AI cloud, just more

analytics. What do you do to do things better,

faster, quicker for clients? Digital, you know, a huge amount of

digital services, integrating them better, automating them better.

But that much I mean, that will change, I guess, the heart of banking.

Does that mean that you'll see more winners and losers because of the

technological advancements? So technology's always changed the heart

of banking, moving money, holding money, advising, money, raising.

That won't change. And you have to do that according to

rules, laws, regulations by country will change is how you deliver it.

So right now, you go on your phone, you can move money and buy stocks.

That wasn't true 20 years ago. So, yes, everything you do will change

with the technology, but you still have to move money, budget, raise money, make

investments, etc.. So, you know, the core won't change.

But will it change? Regulations may change that too,

obviously. So in the US.

So again, would a Trump presidency be more favorable to banks when it comes to

regulation? You know, I don't I don't know.

I mean, you know, I am unhappy with the amount of rules and regulations coming

out today. I don't know where the second

administration of either one would do. I'm hopeful that they focus on growth,

which good for the citizens, what's good for the country.

And I would help anyone I can to do that for my country.

I'm quite patriotic about that. And I do think you need it in terms of

service. I think you need help in helping as a

bank. It's good to get that clear.

Exactly.