Chapter 1: What is the main topic discussed in this episode?
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News. All right, folks, we've got another great voice to talk about the environment, the macro. We're talking about Jamie Dimon. He's, of course, the CEO of JPMorgan Chase, and he is there in Miami at the JPMorgan Global Leverage Finance Conference with our own Lisa Abramowitz, one of the co-hosts of Bloomberg TV's Surveillance. Lisa, take it away.
Thank you so much, Carol. I am here with somebody who does not need an introduction, Jamie Dimon, who is the CEO and chairman of JP Morgan. It's a really interesting day to have this. First of all, huge turnout. But the focus, at least in the news world, is very much in the geopolitics. And I'm wondering, from your perspective, you talked about geopolitics for a long time.
Are you surprised that the market has been so sanguine to any kind of response or any kind of geopolitical disruption?
Hi, Lisa. Hi, Bloomberg. Not really. So one of our brilliant folks wrote a report years ago, Mike Semlos, that if you look at all these wars around the world since World War II, The market reacts, but it never had a real long-term effect other than the Israeli conflict where the oil prices tripled and went out for an extended period of time in 1973.
So the world kind of takes its stride, but geopolitics is a major issue. It's much more complex today than it has been since World War II. I'm talking about Ukraine, Russia, Iran, North Korea, all related with China. And that could have an effect, but it may not. So these things may diminish over time.
This war with Iran, if it's short and oil goes to 80 or 90 or 100, but it's short and not prolonged, it probably won't have a major effect. If it becomes prolonged, then all bets are off the table.
How offsides would this market be if there were truly a stagflationary shock, given the fact that there seems to be comfort with the idea of disinflation right now?
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Chapter 2: What impact does the Iran war have on global markets?
Other things, inflation's a big thing, it's not just oil. So we'll see, right now this will add a little bit, literally a teeny bit to inflation, not a lot.
I was surprised because things were kind of gloomy coming into today, and the mood here is not that. Actually there's a lot of optimism, there are a lot of different companies that are building things and investing things. I mean, how vulnerable really is the US economy right now to some sort of geopolitical shock?
Well, it may not be geopolitical. It may be the companies that start to lay people off. The most important thing in the world today is geopolitical. What happens to the free Western democratic world, which has kind of been under attack by Russia and Ukraine, by Iran in the Middle East, a little bit by China who wants to divide and conquer the Western world.
you know, both militarily and economically. You know, you have all their neighbors are rearming because of their actions, not because of anyone else. So those are the most important things. I'd add global deficits are so large, but those are like, I call it like large moving tectonic plates that may or may not affect the economy in the short run. They may be determinative in the longer run.
And some of these things, when you talk about war, you know, Vietnam, you know, did it affect the economy in the very short run? No, it had a 20 year effect after that. So you've got to look at these things as they're moving plates that can take five years to have an effect, but effectively real. Right now, the economy is doing fine. Asset prices are high. People are assuming things go on.
I mean, no one you talk to has any idea that credit spreads can gap out a lot. And they could, just because of sentiment. And so, yeah, I think there's a little more exuberance than I think there should be. But we've had years of it. The one big beautiful bill adds to growth this year. Bank deregulation, other deregulation adds to growth. animal spirits. So we'll see.
But you pointed out, I think the skunk would be inflation. So we've got to keep our eye on that one closely.
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Chapter 3: How do geopolitical tensions affect market reactions?
Yeah, well, and this actually speaks to something that people are wondering, which is what's going to potentially crash the party. Before we get into credit more significantly, I know that JPMorgan has been expanding significantly in the Middle East, particularly in Riyadh and Dubai.
If you take a longer term view, does any of what we're seeing now have the potential to shape that effort to expand either in the positive direction or potentially to withdraw in the effort?
I think the way I look at it, it creates more risk, it creates more chance of a positive outcome. So all those nations have been modernizing, educating their people, adopting more and more Western methods, wanting to open up their markets, bring in foreign direct investment, invest overseas. That won't change.
In fact, and Tom Friedman wrote about this in his paper today, that this creates a bigger opportunity for long and just peace in the Middle East. And writ large, not just Iran and this war, but Saudi Arabia, UAE, some path to statehood for the Palestinians in Gaza and Palestinians, that's going to be up to them. There are reasons to be optimistic. This opens the door for that.
And there are a lot of naysayers. I understand that. If things go south, they're going to say, I told you so. But this does open up the door for that. So hopefully we're wise enough to help move in that direction. If you watch closely what's going on in the Middle East, Saudi Arabia, UAE, Qatar, Kuwait, they all want peace.
And they all know that really growing and having great economies rely on that. You want to get more foreign direct investment, you need peace. Things like war reduce the chance that people don't want to put real investment in the ground.
And then they even set up a shadow government for the Palestinian Authority with Palestinians, but professionals, lawyers, doctors, business people, to create maybe a governing structure that can actually uncorruptly govern Palestinians and create peace on the ground there and have Israel and Palestine work in a long-term course, but a course to peace side-by-side with statehood. So we'll see.
On that one, I want to be optimistic, even though it's been terrible now for a long time.
You were talking about credit, and I do want to return to it, and what could potentially cause the credit cycle to crack. Even if we don't know the catalyst, do you have a sense of what this credit cycle is going to look like? If it's going to be akin to something that we've seen in the past, or if it's going to have a new kind of dynamic?
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Chapter 4: What is Jamie Dimon's perspective on inflation and economic risks?
Like there are 3,000 clients here, investor clients, 250 corporate clients. So whatever the environment is, we're going to be good serving you properly. I don't have to worry about that. And we're going to invest in our future, whether it's technology, new branches, new countries. So we always run it that way, looking at our margins and things like that. Now of course, we manage credit.
Some of the credit's just managed because people want a loan, they come to us, we offer X, and someone does something more aggressive, and we lose. And we're totally fine with that. We've seen a bunch of that on the leverage side. Sometimes we tighten our standards.
We want more covenants, we want more collateral, we are doing less subprime, we trim our sales in credit card, for example, where you have lessons learned. And once the lesson's learned, you make a bunch of changes underwriting. But we've always been pretty good at underwriting credit. So when there's a cycle, it's going to run through our books too. But we're adults.
Reduce our results, we'll still be fine.
You talk about some of the technologies in order to serve clients. Artificial intelligence is a huge focus, and there's been some pushback by JPMorgan investors about the amount that JPMorgan is investing. How are you looking at what areas you think JPMorgan is going to win in as a result of AI? What gives you confidence?
So everything we do, whenever we meet, if you were running a business at J Morgan, at that level, credit card, auto, you know, mortgage, sales and training, we always say, what are you doing to grow your business? And that could be adding great sales people, if you're adding countries. Very often, it's adding technology. It's various forms of technology.
It's just building something that's a digital account or an API that a customer wants. And more and more it's AI. So we use AI for risk, fraud, marketing, underwriting, note taking, idea generation, error reporting, reducing errors. And there are 600 use cases, 50 I'd put in the important category. And that's part of what you do. It's no different than the past.
And we can use it to do something better, faster, quicker, cheaper. hire staff from the customer, we are going to do it. And so AI is the new front of wonderful stuff coming. And I think for society, you got to remember, people talk about the negatives. My guess is, I really do mean it, like maybe in 30 or 40 years, your kids, you have two kids, right?
are going to be working four days a week, maybe three and a half days a week, living to 120. A lot of cancers will be cured. A lot of disease will be cured. Food will be safer. Cars will be safer. It will be a wonderful thing. The risk that people are focused on today is that somehow it gets deployed so fast that people don't have time to adjust to it. There are too many layoffs.
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Chapter 5: How vulnerable is the US economy to geopolitical shocks?
you have temporary advantages, and if you stay ahead temporarily, you have an advantage, but I don't think you have a winner-take-all thing. The world is really competitive. And then look at, it also opens up, in a good way, competition, so FinTech, so we now have all the big bank, regular competition, but we also have hundreds of FinTech companies.
We're using new technologies to sometimes take just a little sleeve of business and then expand it. And it could be data, it could be trust, it could be rent payments, it could be cross-border payments, it could be anything like that. And I appreciate that. But we have to, some of that money is very specific. We need to do that too.
J.B. Diamond, appreciate Stablecoin, but no thank you. I will take it back.
We have no problem with Stablecoin.
Okay, but there is an application.
Properly regulated, yeah.
Yeah, going forward though, do you find a reluctance by some employees to adopt to artificial intelligence because they're worried about losing their jobs?
Not really.
Yeah, we have this, so we use, I guess it was 600 use cases, we do it everywhere, but we have, on our phone, an LLM suite, and we have like 12 or 13 or 14 products that you can use to review your own documents, to write, to summarize research, to, if you want to ask, the lawyers want to ask how many legal documents, have these things in it, and could review that and tell you that in minutes, and 180 or 160,000 people use it a week.
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