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Indiana University Announcer
Indiana University strengthens tomorrow's workforce with practical, real world experience. IU grads make a difference in your community, serving as teachers, nurses and engineers who rise to tomorrow's challenges and meet them. Learn more at iu.edu impact,
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Podcast Intro Announcer
Bloomberg Audio Studios Podcasts Radio news.
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Interviewer
All right, we're wasting no time. Let's get straight to our exclusive conversation with Jamie Dimon, Chairman and CEO, JP Morgan Chase. Jimmy, good to have you with us and thanks for having us here.
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Jamie Dimon
Happy to be here.
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Interviewer
The bond market is front and center. We're seeing yields at the highest levels in decades. Yet we see the stock market keeps rallying. In fact is again in the money today. Should we be nervous or not?
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Jamie Dimon
I think it's, it's always reasonable in the best world to be nervous a little bit because you mentioned the opening. There's a lot of geopolitical risk. You have a bunch of wars going on which I hope are properly resolved. You have bond rates going up. Inflation is a little bit higher than people thought. So. Yeah, but, you know, but I'm not surprised. I think when people say you should be surprised, bond rates can go up, the notion that somehow people said they'll never go up is the wrong notion. And so companies like us prepare for higher rates, lower rates, and, you know, figure those things can happen.
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Interviewer
So the thing is, they're at the highest level in decades. I mean, that is where the surprise could be.
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Jamie Dimon
I mean, I think they could be much higher. They are today. Oh yeah, and you say decades, but we've had like one of the greatest bull market other than Brief Covid. You know, since the great financial crisis, we've had a huge bull lower rates for the most part, for a long period of time. But the world changes. You know, like we may have gone from a savings glut to a, to not enough savings, you know, and you know, the investments you talk about, In America alone, 4 to 50 billion last year, 750 this year, a trillion next year. Global deficits at all time highs and they are huge. So governments, including ours, has to borrow huge sums of money more next year than this year. So, you know, people who own bonds, they tend to look at these things and both inflation and, you know, demands for capital can push up rates.
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Interviewer
The thing is, it's not just an inflation story right now. It's also, I guess, credibility story.
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Jamie Dimon
Right?
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Interviewer
I mean, we, we have an environment where everybody's trying to pay debt and governments around the world have so much debt at a higher level. I mean, at some point it's Going to hit.
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Jamie Dimon
Yeah, it is going to hit like US government debt is 30 trillion. The average rate is three and a half percent, you know, so even today they can possibly refinance finance it at low than that rate. They have another $2 trillion to do this year. So. Yeah, but the thing is we don't know when, we don't know when the world gets too scared about that. When inflation makes it where people don't want own long term duration securities or where it's just a demand for capital. There have been examples in history where there's so much demand for capital, rates are going up, but it's for a good reason. People are making productive investments in, in the world. Government spending is often not that. Government spending is much more consumption related which doesn't help future productivity. So all that spending too drives corporate profits. So people should be that surprised. The corporate profits are doing quite well too, which helps obviously the stock market.
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Interviewer
The question I guess if I could get you to look at the crystal ball, right. At what yield would that be? Spillover to the economy, to policy, to markets.
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Jamie Dimon
Yeah, so I'm very cautious about crystal balls because I don't think anyone has a crystal ball. We look at all potential possible outcomes and you'd be surprised from recessions with inflation for recession with no inflation from your home prices down 40%, stock price down 40%. It's a wide range of outcome. I think when people think this is our forecast that that's what's going to happen. I think that's a, an intellectual error. I should be much more thinking about range of outcomes, possibilities, probabilities. And for us we want to handle all of them so we can serve our clients. So I'm not that worried about, you know, our profits going down stock. That doesn't worry me at all. I want to serve our clients and do a good job. And I do worry about the geopolitics for the future of mankind as a far more important issue in my mind. But, but just looking forward, I think the pretty my own view and it's just different than other people is that rates can easily go up more and credit spreads can go up more if
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Interviewer
people everything's going to be okay even with rates going up.
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Jamie Dimon
No, at one point you have a lot of people have to refi at higher rates. So there's this general assumption that oh, I can refi all this debt at roughly the similar rate. With credit spreads go up, people, companies and governments will have to pay more. And so that can put stress in the system and Easily could cause a recession type thing. Again, I'm not terrified of recession other than, you know, hurts people get laid off. But, but I think as a scenario that's a very possible scenario.
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Interviewer
There are risks. People have called time on the credit market. If yields continue to rise, there'll be a lot more pressure on the credit market. How might that play out?
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Jamie Dimon
Well, a lot of companies are leveraged. There's 5, $6 trillion of leveraged loans out there. They're going to have a hard time refinancing at those rates. The equity values would be considerably less. Some will be prepared for it, some hedge for it. A lot of people didn't hedge for it. So which means that people don't think about normally, but that means to take an interest rate risk, you know, and that they should be very cautiously take interest rate risk. And so this, as you said, this could put pressure on the system.
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Interviewer
High yield, that's been so much demand for it. Never mind that inflation is sticky. Is this worrying or not?
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Jamie Dimon
You mentioned the top. There's a little bit of exuberance in the marketplace. Personally I'm not a buyer of credit spreads. I am not that interested. Other people do. I would not buy credit spreads at these levels. And you know, other people have other views. But a lot of people out there remember they're, they have passive, passive funds that buy it. You know, people have to meet indexes. A lot of reasons people have to buy and they're just trying to create a little bit of alpha for themselves as opposed to would you go absolutely long credit spreads or not. So I would have the luxury of saying we don't have to now of course we're in the business so we continue to make loans that I think will may be more stressed than people think. But that's part of a long term strategy. That's not because they like it at this price.
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Interviewer
But the thing is there's so much demand. What's behind that demand? Is it that complacency? I suppose, yes.
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Jamie Dimon
But demand changes. You know, people forget sentiment. If you look at, you know, what happened before the crash of 73, the crash of 82, the bond market in 94, the crash of 2000, that was all true. And then things change. And even the things change about when people talk about liquidity. Well, what happens when things get tough is sentiment changes and people want more cash and you know, so the liquidity requirements change, money supply changes, central banks change, banks pull back and that all can pull liquidity of the market at precise the wrong time. When people need cash, they sell risky assets. So you might predict that's all that. No, but I wouldn't be surprised. That happens.
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Interviewer
It's not just about markets. Is about AI, is about tech. I mean, you know, JP Morgan has come out to say it is actually a tech company that just happens to be a bank. You have a huge tech budget. I think $9 billion, 3 billion, 20 billion, and then I think 3 billion for cybersecurity. Talk to us about how you're mobilizing that capital. Where are your areas of priority?
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Jamie Dimon
Yeah, so we don't actually deploy capital by saying we'll put capital there. We in everywhere, we do, in every business we grow in China, like here, if you look at just China, we've gone from banking, 10 companies to banking, I think it's two or 300. We've gone from banking, 30 multinationals coming here to banking, 600 multinationals coming here. And as we serve them, it deploys capital. So the deployment of capital, deployment, outcome of building the business, that's true for every country. It's true. We open branches. The United States, it starts to demand capital. As people give us deposits, we start to make loans. So that's. So we are pretty comfortable. We can deploy capital intelligently, serving clients. We don't deploy capital like an investor saying, oh, this is the best place to put it. It's kind of an outcome of how we kind of grow the business.
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Interviewer
And always though, I mean, how are you investing?
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Jamie Dimon
Absolutely. Well, I. If you were any business. Business meeting we have, and we've been doing it for 13 years. At every business meeting you have, we talk about how you can use technology, do better job for your clients. What are the projects you have? So we're using AI for risk fraud, marketing design, document management, who you should call in the morning, salesforce type things, branch location, hedging. And it's the tip of the iceberg. You know, it's moving very, very quick. Coding is moving very quickly. So we wanted to stay up there and use AI to serve our clients. And we're going to do that. How can I do a better job for our clients using a technology called AI? Just like we did it with a technology called digital, a technology called cloud, and way back a technology called mainframe. It's no different. We got to do a better job for a client because that's how we compete.
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Interviewer
So how will JP Morgan look like in three to five years on the back of developments in AI?
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Jamie Dimon
How will.
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Interviewer
How will JP Morgan look like?
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Jamie Dimon
I mean, how will this is, I hope it's thriving. But what's not going to change? People have to hold money, move money, invest money, raise money. I think how that happens will probably change. You know, we use blockchain. There may be more blockchain being used to do that. There may be more people in AI jobs and less people and in certain jobs, you know, so it'll morph, but that's our job to serve the client. And of course, you know, I always point out that we, in the old days, we had, you know, the big banks were our big competitors, the investment banks, and that was global. Different banks in every country. Now it's fintech in every country. And they're good. You know, a lot of these people Revolut, Stripe and Citadel, they're quite good. So we have to compete with all. And a lot of that competition will be technology and AI. So we are investing that money to be competitive, to do a better job for our clients. And we're not fast and nimble. We'll lose.
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Interviewer
And you're fast and nimble, right?
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Jamie Dimon
Sometimes we're fast and nimble. Sometimes I feel like we're. I feel like we're a dinosaur elephant riding a bronco.
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Interviewer
It is about manpower. In the end, we've had the likes of our manpower, women, power. It's about the workforce. We heard from Senate chartered shedding about 8,000 jobs about the spread of three years. We also had Matters saying it's shedding the same number of people. I mean, how are you looking at manpower, women, power? How are you looking at the workforce on the back of, you know, advances being made in the efficiency?
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Jamie Dimon
The most important thing is could do a good job for our clients and use AI. Will it change the structure, jobs? Yes, will. I think there have been very few announcements that are AI related. I think a lot of companies have too much bureaucracy and they may use AI to cover up the fact that they should never hire them in the first place. But AI is going to change jobs. I don't know. I think it'll reduce some of our jobs down the road. I don't think it'll be all different types of jobs. And you have to deploy it at a level like, I think we'll be hiring more people and probably less bankers in certain categories, and it'll make them more productive. So when you get up in the morning and you want to interview someone, it'll lay out what I've said in 14 different places, will give you questions. Your job will be the same. You'll just be much smarter. At how you execute that job. So I guess the question, but we, but we will retrain and redeploy people. You know, we have 10% attrition a year, which means our headcount's going down 25, 30,000 a year. And we are, we're going to be prepared to say, okay, we love these people, they're great, great. We're going to take care of them. We're going to give them reskilling, new skills, better jobs, move them somewhere else, maybe early retirement. And then I think society maybe need to do a little bit that get prepared. And in my view, that's got to take place locally. So some jobs are across the nation, like AI and cyber and maintaining certain types of equipment and cars. Other jobs are very specialized. You know, this is a mining town and that's a car manufacturing town and that's a chemical town. And so, but local schools and that's, I mean, high schools, community colleges and colleges should work with the local business. Say, I'm going to, I'm going to give these kids certificates in the 12 weeks or one year of training they need to have that job. There are going to be 8 million trade jobs which pay $100,000 a year available in the United States in the next five years. So it's not, we're not, we're not helpless. We just have to get prepared, kind of have a plan. The plan is if it happens too quick, it may not. But my view is whatever you think there might be a risk, prepare for it. And if it doesn't happen, so be it used to. Most of the stuff you did in preparation, you should have done anyway.
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Interviewer
I just want to be clear. So yours is basically about natural attrition. You're not looking to perhaps downsize because of the efficiencies of the.
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Jamie Dimon
That's going to, it will cause that. But, you know, that's, that happens. And that's been happening my whole life. I mean, if you look at all the jobs, they've always been changing how you do jobs. But we will do it to do a better job for clients. And yes, it will reduce some jobs. We know that. I can't tell you specifically what because, you know, it's kind of at the early stages. It is every app, every process, every job will be affected. Some will be more productive, some will be not enough jobs. And then we'll help our people, you know, have a good career.
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Interviewer
Jamie there's been a lot of backlash on social from what Stanchon CEO Bill Winters said. He talked about how, you know, I will wipe out the lower value human capital. And a lot of people took issue with how clinical and how cold and how perhaps insensitive that was. Can you weigh in on that?
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Jamie Dimon
I mean, Bill's a friend of mine and all of us say something incorrectly, he's already come back into, you know, taking that back. It was an artful way to say something. But I also think it'll be all jobs. I don't think it's be higher level, lower level. I think it'll be more than you think. But it also would create some jobs. So, you know, in some ways if you, if, you know, back office jobs disappear, we need more front office jobs to cover more clients. So, so you look, you get a lot of noise from this. I see all the backlash and data centers and I, I do think it's incumbent upon us, society to think through. If it happens too fast, what do we do about it? You aren't going to stop at all, you know, and you can talk all you want, do the work, get prepared, take care of your people, take care of society. And I think we'll be okay.
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Interviewer
We hear that you'll be speaking to New York Mayor Mamdani along with David Solomon. Of course, we know he wants to increase taxes for the wealthy in the city. What's the message you're sending him? What will be your conversation with him?
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Jamie Dimon
I did be with him and I told him, you know exactly all the great things that JP Morgan does, the employees, the taxes, the philanthropy, the biggest in New York, the biggest frugal lender, how we take care of our people, how they all get medical, the minimum wage of 25. Just so he understands and that a lot of we do in New York is exported around the world. So it's a huge export for United States, a competitive advantage for the city and a competitive advantage for the United States of America. And they were good citizens and we always have been known. We talk about affordable housing and child care, which are his two things. Well, of course, you know, everyone I know thinks we should do more affordable housing. But I told him it's smart policy that gets that. You can say it all you want, but if you watch governments, they do some things that have the absolute opposite effect of what they say. And I can go through a mini exam. Same for child care. It's got to be done right, got to be effectively, it's got to be place based, it's got to work, it's got to be thoughtful and stuff like that. Every city. But he had Read my chairman's letter and we went through that. Every city has to compete, and they have to compete at every level. Arts, science, schools. That is what it is. I'm not inventing that. He can be an ideologue. He has to compete, too. And, you know, we'll see. Well, he learned that he's got to make the city a place where people want to grow and build and live and have families and work. And he's got to compete with Shanghai and Hong Kong and Singapore and Nashville. And people vote with their feet. So it isn't this morality thing that people talk about. It's like, are you building a great city with lower crime? And stuff like that. I also want to point it out that I did mention to him because it's important to me that I am against racism of all types, including anti Muslim racism, anti Jewish racism, which I consider anti Semitism, anti Jewish. And I think Israel has a right to have a state. So I think there's a little confusion between, you know, anti Semitism. So you may not like what a country is doing. I don't like what Iran is doing. It doesn't make me anti Muslim. And so I think we have to be a little careful. But I want to be absolutely clear. And he acknowledged it and he said. I think he kind of agrees.
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Interviewer
I want to go back to the taxes that he wants to impose. At what point do you think those taxes will make New York less competitive? At what point do you think, you know, there'll be an erosion of talent within the city?
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Jamie Dimon
I think it's already doing. In that. In my letter, I pointed out that JP these are just numbers. JP Morgan, when I got there, had 35,000 employees in New York City, and now it's 26,000. We had 12,000 in Texas, and now it's 33,000. That is because of individual taxes, corporate taxes, state taxes, but also the schools in Dallas. They become very good. The life in Dallas, you know, the Dallas mayor calls up all the time saying, what can I do to help you? I have land over here. I have, you know, and that is pro business and pro people love living there. And that's what New York City. Now, New York's a wonderful place, too, but that is the result. When I grew up in New York City, and this is an amazing number in the 70s, that 120 of the Fortune 500 were in New York City. In those 10 years or about those 10 years, 60 left or failed or merged out, mostly because of things like taxes and crime and stuff like that and those are big names like ge, IBM, American Airlines, you know, and is that what you want? You know, and that's what it seems, people seem to want. They think that somehow being anti business is going to help a city. It's not. So we all want to pay fair taxes. Not. That's not the point. But at one point people vote their feet and there are a lot of studies that have shown that all these people moved out and they, they're obviously the tech. Obviously New York booming, you're not going to see in this year's taxes. But a lot of people are paying billions of taxes left. Why do you want that? How does that help the lower paid person in New York?
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Interviewer
Just one final question before we let you go.
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Jamie Dimon
I hear these people talk, they say fair taxes, fair share. What do they mean? Like I agree with the fact, you know, it up to me, I saw Jeff Bezos, who I love swashbuckling, you know, fighting. I don't think the lower people make it under a certain amount of pay any taxes at all. You know, I would agree with that. But when they say fair share, what do they mean? I mean they should give a number and say that's a fair share. So we'll see.
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Interviewer
So what do you make of the beef he has, Mamdani has with Ken Griffin? I mean there's been a lot of pushback as well.
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Jamie Dimon
From my view is I didn't speak to him about that. I think he realized he made a mistake in naming Ken. Vilifying a name and a person and you know, and even, you know, my grandparents were all Greek immigrants. Okay. You know, I've been working my ass off now for a long time. I think vilifying people, simplifying arguments, you know, even if you think it's politically is a bad idea. And I think he probably realizes that was a bad idea. It's probably why he's seen a bunch of us now. You know, I'd like to maybe have a better relationship with the business community, but we'll all be doing the same thing. What does he do? I don't care what he says. What does he do? I will judge that and so will what actually happens. Because you can have, you can talk about morality and ideology all you want, but if things don't get better, you didn't do a good job. And in my view, and I'm talking about him now, I have seen mayors who make statements and they make it worse and worse and worse, you know, and they don't know. They can't get into details of what. Why is affordable housing not there anymore? Why is this not work? You know, and so, you know, hopefully he'll learn. I want him to do a good job. I'm not against him.
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Interviewer
So, Jamie, I'll be remiss not to ask you about China. We are in China, after all. We saw that. I guess, warm chemistry between the two leaders. Xi Jinping as well, Donald Trump. Does that change your perspective on China and perhaps, you know, the appetite for investments here?
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Jamie Dimon
Not really. Look, I think I. Look, we have. China and America have real differences, and I think these wars also highlight that, you know, America, we want Ukraine to end up as a free and democratic state. You know, we. I would. I'm not saying I don't know about the war, but I'd like to see Iran end up without nuclear weapons and no one controlling the Straits or Hormuz. And I also object to the notion that somehow Iran wasn't a threat. They've been killing and murdering people for 47 years. That's not a threat. And a lot of Americans, a lot of Muslims, a lot of Jews, a lot of other people, they've been having proxy wars, you know, for 40. I don't know why you love these proxy war thing, so that makes it more complicated. But Taiwan aside, America and China have a lot in common. Okay. We want to help our people. You know, you. This country's grown dramatically. I think that's a wonderful thing. We have a lot of common interests and anti terrorism, anti nuclear proliferation, proper. The proper control of some of these. I think this can damage society. So they should engage all the time at every level. You know, work out the trade differences. There are going to be some real differences in that. And then, you know, have a good, proper relationship. I think it's good for both. I think it's good for the world. And the world is going to deal with these two huge powerful countries and we should help each other and help the world. And so. Well, I like the fact they did. I applaud they're doing it.
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Interviewer
What's the biggest risk for the Chinese economy right now, you think?
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Jamie Dimon
The Chinese economy? You know, they've been very smart managing the economy for years, but I would say too much reliance on exports. They know that that's been in their plans. That that irritates a lot of the countries around the world. I think that there are neighbors around the site. China Sea are getting quite upset with them about their behavior. The South China Sea, not because of anything that America does and trade. We should work out trade in a way that doesn't damage the global economy. So, but I look, they've been quite. And also some of the capital allocation in real estate and some of the local stuff. But my experience with China, they, they kind of know these issues and they kind of go about attacking them strategically, correctly, over time.
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Interviewer
But is there a sense that China has become somewhat of a safe haven given, you know, all the, the chaos elsewhere in the world?
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Jamie Dimon
Yeah, but it's, yes, but it's somewhat artificial. I mean, America is still a safe haven. I mean, just, we just surprise people, you know that recently. But we're still probably one of the safest countries in the world, the best investment destination in the world, the most secure rule of law. We give you a dollar, you can do whatever you want with it. But China has become a large, important country and I applaud that. I'm not against the that. And they of course think that they're more, they're more consistent with other countries. That's been true a little bit recently. That's not forever, that's recently.
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Interviewer
But is that changing the perception of investors though? I mean, are they looking to China as.
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Jamie Dimon
A little bit. But if I was an investor, I'd always be looking at a place like China. You know, we have, you know, when you look at China, when any, any investor comes here, you just have to be impressed with their cars and their batteries and their solar and their machine tools and their capabilities. Of course, that's how investors are seeking out opportunities around the world. There'll be plenty of opportunities here.
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Interviewer
I've been messaged and I was told to wrap it up. Jamie, always a pleasure. Thank you for joining us on the show. Jamie folks, Chairman and CEO of JP Morgan Chase.
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Indiana University Announcer
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- [24:04]
Podcast Intro Announcer
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