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- [00:00]
Indiana University Narrator
Indiana University is shaping the future of healthcare. Advancing discoveries that become treatments for Alzheimer's, obesity, cancer and rare diseases. And training the providers trusted to deliver them from the lab to the clinic. IU powers medical breakthroughs and the talent behind them. See how IU solves. What's next iu. Edu Impact.
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Jamie Dimon
Bloomberg Audio Studios Podcasts, Radio news.
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Interviewer
Jamie, we're talking about the fact that you have lent into technology over the last decade, billions of dollars invested across the business. When it comes to AI, which parts of the JP Morgan business are going to be most transformed by AI?
- [00:42]
Jamie Dimon
Yeah, so we already, we've been doing AI since 2012. So people think it's a good new thing. Jenny is kind of new, but not all day. We have 2,000 people doing it, spend $2 billion a year on it. It affects everything. Risk, fraud, marketing, idea generation, customer service. And it's kind of the tip of the iceberg. And so we are, we're deploying it. Every time we meet as a business, we ask, what are you doing? What are you doing to serve your people? Why can you do better? What is somebody else doing? So we're freely deploying it and safely. We have a lot of rules and regulations in place of our own data and how we use it, etc.
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Interviewer
Is it having a material impact on revenues for JP Morgan? If not now, then when?
- [01:18]
Jamie Dimon
So we have shown that for that for 2 billion of expense, we have about 2 billion of benefit. Some we actually can do real detail. We did this, we reduced headcount, we saved this time and money, we reduced errors. Some you can't. It's just improved service, something like that. It's like almost worthwhile, worthless to say what's the NPV? But we know about $2 billion of actual cost saves and I think it's the tip of the iceberg. We're getting better and better at it. We know how to do it. As the managers learn how to do it, they're asking more questions. Why can't it do X and why can't it do Y? And then we, I don't know my phone here we have suite and all. I'm suite on internal data to do research and summarize reports and, you know, scan contracts and do things like that. 150,000 people a week use it. So it's quite productive.
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Interviewer
More and more of your employees are using your. The Agentic AI.
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Jamie Dimon
Our own LLM and Agentic is just starting, you know, but that will be deployed over time too. But it's also been used for coding I mean, it's being used quite broadly now. And like I said, part of is getting your mind working around how you're going to use this thing. So our managers and leaders have to do it.
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Interviewer
If you look out five years, are there more jobs in banking as a result of AI or fewer?
- [02:31]
Jamie Dimon
I look, I think, I think people shouldn't put their head in the sand. It is going to affect jobs. So think of every application, every, every service you do. You'll be using something to enhance it. Some of it'll be you doing the same job and you're doing a better job at it. There will be jobs that it eliminates, but you're better off being way ahead of the curve and retraining people. So we retrain and redeploy a lot of people. So for J.P. morgan, we're successful. We'll have more jobs, but they'll probably be less jobs in certain functions.
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Interviewer
When you look at the spend on AI infrastructure, chips open, AI not lost, it's not making a profit loss making deals of about a trillion dollars this year. The hyperscale is the spend there. What is your reaction when you see those numbers crossing? Are you comfortable with that kind of spend on the infrastructure around AI?
- [03:19]
Jamie Dimon
It's a lot. I'm not sure it's all ever going to be totally spent. I think when you look at big tech, like tech that happens like this and you go look at cars, you could look at television, you look at Internet, big money's got spent. There were a lot of losers, a lot of winners. In total, it was productive. So, so take, even take the Internet bubble, Remember that blew up and I can you And I name 100 companies that you know were worth $50 billion and disappeared. But out of it came Facebook, YouTube, Google, you know, so there will be real big companies, real big success. It will work in spite of the fact that not everyone who invests in it is going to have a great investment return.
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Interviewer
And of course, those investments are part of what has powered this bull market in stocks. And on Sunday it'll be three years of that bull market. Where do you think we are in that bull market? Is there, is there any complacency there? Is it underpinned by rational factors? Is there more momentum?
- [04:10]
Jamie Dimon
Yeah, you know, look, we're in a bull market. It's been clear. Asset price are high, credit spreads are low. Consumers still. Okay, the consumer has jobs. Remember? Jobs, jobs, jobs. What usually starts to force people to cut back and change. The consumers spend less and companies cut back. So far, so Good. There are a lot of issues out there that, you know, the economy's got to deal with from all the geopolitical stuff. Maybe they'll start out well. What's going to happen? Inflation. I'm a little more nervous about inflation not coming down like people expect. That might be a surprise. On the other hand, there's a lot of spending. There's a lot of government spending, which is inflationary too, by the way. And, and so I look, I don't know, I hope for the best, plan for the worst.
- [04:50]
Interviewer
And you're not worried about a recession in 2026 for the US you made that clear.
- [04:55]
Jamie Dimon
I think it could happen in 2026. I just, I'm not worried about it as a different statement. We'll deal with it. We'll serve our clients, we'll navigate through it. A lot of us have been through them before. You don't wish it because, you know, certain people get hurt. But. But it could happen in 2020.
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Interviewer
We're still, of course, in the US government shutdown.
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Jamie Dimon
But I do think there are positives, like deregulations are real positive, which also helps animal spirits with a positive. And you know, in the one big beautiful bill, there's also more stimulus that has positives for the economy but maybe negatives for inflation. So how it all sorts out? Well, we'll see.
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Interviewer
Markets are looking through the U.S. government shutdown. Is there a period of time, if this shutdown continues, where markets start to wake up and become concerned?
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Jamie Dimon
I don't think so. I look, I don't like shutdowns. I think it's just a bad idea. And I don't care what the Democrats, Republicans say, it's a bad idea. It's not a way to run a railroad. I don't think it's critical. We've had. I Forgot the number four or five or six, you know, one of them went for 35 days. I'm not sure anyone really affected the economy, the market in a real way.
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Interviewer
You mentioned inflation. You said you're a little bit more concerned about inflation than maybe some others markets pricing in about 100 basis points of cuts between now and this time next year from the Fed. Does that therefore seem reasonable to you or markets are over their skis in pricing?
- [06:09]
Jamie Dimon
I think, you know, markets have to make a forecast. I want to point out that forecasts have almost always been wrong and the Fed's been wrong too. So it isn't like their forecast is, you know, going to be accurate. If inflation does goes up, starts ticking up for whatever reason. And it might, you know, it's going to be hard to do 100 points. They might do some, you know, and then they have the battle, you know, the give and take of if unemployment starts going up. Obviously going to do some. So we'll see.
- [06:36]
Interviewer
You've long talked about geopolitics as being a risk factor. We're seeing gold at $4,000. We're seeing Bitcoin at record highs. The dollar though year to date down about 8% on the Bloomberg dollar index. Are you seeing structural shifts out of the US dollar and is that sustained theme?
- [06:51]
Jamie Dimon
A little bit, but again I wouldn't have harpooned over it. The dollar did well for a long time. If you, if you own US stocks a foreigners own something like $35 trillion of US stocks and bonds. And because the stock market's gone up, your allocation, the US has gone up. I think it's perfectly reasonable for investment committees in Europe and around the world to cut back a little bit their equity ownership. We've also seen people changing their hedge ratios and stuff like that. So it may just be a rational adjustment to, you know, I don't expect a stronger dollar. The tariffs has this effect, but it's still, if you look at America, still the greatest place in the world to invest long term.
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Interviewer
And dealmaking seems to be picking up. And of course JP Morgan played a significant role in the takeover. The take private of EA $20 billion in financing provided by JP Morgan. Is that a marker in the sand? Is that, is that a one off as a deal of that type or is it a sign of more competition between frankly the banks and private credit?
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Jamie Dimon
Well, we're agnostic about private credit, so there may be competition or not. We want our customers to do it their interest. We offer both, you know, and we did that whole deal in 11 days and we didn't do it that way to make a point to private credit. You know, they said do it differently, we could have done it differently too. And so but there's a lot of merger talk, there's a lot of firepower, there's a lot of tack. You know, we had a bunch of IPOs in the US I know they've only been a handful here. The tech world is still doing quite well. You know, 800 companies here. I think it was 400 last year. You know, we now have 500 bankers coming. The innovation economy globally around the world including vet is like 50 alone here. So look, I'm a long term optimist. I do think asset prices are High credit spreads are low. And you know, you should take that in consideration how you think about the future.
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Interviewer
When we talk about credit and you talk about debt. I'm thinking of some data, in fact that JP Morgan put out on auto loans. Biggest losses in the most recent months, I think since 2020 of 2020. Is that idiosyncratic to auto loans in the US or are you seeing other weak links being being stressed?
- [08:46]
Jamie Dimon
I think, you know, there were one or two frauds which I won't go through. But in general, consumer credit was so good. It's basically most of us just normalizing for both credit card but subprime order is a little bit worse than normalizing. It doesn't look like it's getting worse here, but it might. But a lot of that if you look at the history of credit for consumers, it's employment is when employment or home prices go way down, which, you know, we don't maybe not expect that that drives, you know, credit.
- [09:16]
Interviewer
The administration is talking about possibly changing the requirement around quarterly earnings. And you've talked about this, you've written about this with Warren Buffett around the guidance part of earnings and quarterly guidance. Would you welcome a change like that and would it mean a change at JP Morgan in terms of how often you.
- [09:32]
Jamie Dimon
I would recommend we still update investors quarterly with much less stuff and we just be very transparent. I think the bigger problem was just reporting quarterly. It was forecasting where, you know, CEOs get their back up against the wall. They have to meet these things, earnings and they start doing dumb stuff to meet earnings. And that kind of public pressure. I think it's a smaller part of a much bigger problem. We've gone from 8,000 public companies in 1996 to like 4,000 today. And you know, that I'm not sure is good. We drive companies out of it. We have cookie cutter governance. There are some activists are good, but they're activists as litigation. There's cookie cutter compensation. There's very expensive listing. There's, you know, disclosure rules, which you've heard about them here. I mean, endless rules and that it makes it hard for a small country to go public. So I think, and they're trying to do that here, have an active small company going public. That's what we all need and create an equity culture which Rachel Rees was trying to do here. And I think they're doing a good job reducing regulations, you know, trying to make it easier to do business and reduce regular banks. But also in business in general, you want an active market and we've kind of crushed it because the research laws and MiFID and disclosure requires. So if I was a regulator I would take a step back and look at the whole system and say how can we improve it and make it safer? You know, not and look at it holistically as opposed to, you know, just everything is like a one off conversation.
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Interviewer
I need to talk to you about some other changes that the Trump administration take. You are a champion of capitalism and free market capitalism. So when you see stakes taken by the administration, the US government put it that way in terms of intel golden share for US steel, investments in a lithium mine producer. How does that sit with you?
- [11:14]
Jamie Dimon
So the first thing is there are legitimate complaints around trade. So just take that first. Somewhere around just unfair trade. It's unfair to use, you know, it's not just tariffs, it's surpluses capital, it's quotas, it's just, you know, it's the non tariff barriers and then there's national security related. So I think a national security you have to take some special thing I call industrial policy. But it's got to be done right. It's got to come with permitting. No social, no virtual signaling. And so like the deal that was done for mp, I thought they did a very smart thing. They're giving mp, which we were part of banking, you know, does rare earth magnets a chip because you have a long term contract with the government. It gives them a chance to survive, to get through. They call the valley of death. And, and they bought a piece that go into it. So I thought that was really well done. I'm not going to comment all of them. I think you'd be very careful when you get involved in that kind of stuff. Why are you doing it? What's the long term benefit? You know and then of course, you know, Democrats get in power, they're going to do even more of it. So I would be very cautious about how you go about that. I do think they need to do more. You cannot do certain things United States, you think a company is going to do it to be they'll be bankrupt in seven months. They either need free land, cheaper financing and maybe the most important is long term purchase agreements with defense or companies. Something that gives them a real chance to build a business.
- [12:32]
Interviewer
You touched on the fact that we're here in the uk The Chancellor here, she addressed the summit, she addressed the conference, she's making those changes. Is the UK doing enough? They're going to be potentially some changes when it comes to listings. They may be Announced in the budget in November. Is enough being done to make the UK to make London an attractive listing destination?
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Jamie Dimon
Well, first of all, some here, it's a wonderful city, It's a melting pot. The brain power is extraordinary. And I'm talking about not just financial, but lawyers and technology, media. It's unbelievable. It's a huge benefit to Europe, to uk Though I'm not sure the rest of UK appreciates that much. And they are, they're saying the right things. They're deregging. It's not just banks, but business in general. Reducing red tape. I call it blue tape now. You know, they're reducing red tape, blue tape. They're, you know, they're trying to create a. Consolidate the pension and savings schemes. I think is very smart, have a little more of an equity risk culture, you know, not to lose money, but to take a little more risk. And maybe some of these tech companies here, yeah, I applaud everything they're doing. I know the, you know, the public here doesn't applaud as much as I do, but if they should, they have to keep going.
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Interviewer
H1B. H1B visas in the US talking about attracting talent. $100,000, is that a barrier to the US tech sector? Are you concerned about that?
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Jamie Dimon
I'm not. Again, I've got heartburn. It's 600,000 employees. That's it. We have 160 million people working. And I do think, you know, these things happen. I didn't like when I first don't particularly like it, but. But you know what? It was being abused. We did the analysis and the work. It was not supposed to be to bring cheaper workers here to make more money for your company. It was meant to bring very talented people and you don't necessarily have to for your company. And we do. We may have made some mistakes, but let's just fix the system. I was with the president once and he said more merit based. More merit based. In fact, I heard him say we should stamp a green card in every person in this country who went to university or advanced degrees and have them stay here and build their career here. That would be my belief. I want them to go back to that.
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Interviewer
Yeah.
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Jamie Dimon
Not, not make it harder, but make it easier for real merit based.
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Interviewer
Speak to the. You speak to the president every week?
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Jamie Dimon
No. Okay, I've spoken a couple of times.
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Interviewer
Jamie Dunn, Chairman CEO, JP Morgan, thank you very much indeed. Really appreciate it.
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Karen Moscow
Bloomberg Daybreak is your best way to get informed first thing in the morning, right in your podcast feed. Hi, I'M Karen Moscow. And I'm Nathan Hager. Each morning we're up early putting together the latest episode of Bloomberg Daybreak US Edition. It's your daily 15 minute podcast on the latest in global news, politics and international relations. Listen to the Bloomberg Daybreak US Edition podcast each morning. For the stories that matter with the context you need, find us on Apple, Spotify, or anywhere you listen.