← The Interview
The Interview
Jamie Dimon, head of US bank JP Morgan Chase: I am worried about the global economy
00:22:59
Simon Jack speaks to Jamie Dimon, head of US bank JP Morgan Chase about the global economy
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- [00:00]
Simon Jack
This BBC podcast is supported by ads outside the uk.
- [00:06]
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- [00:27]
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- [00:28]
Jamie Dimon
Please see. I'll take that as a compliment.
- [00:30]
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- [00:37]
Chip Kleinxel
So much data, but not enough insight. It's time to change the way companies think about data.
- [00:43]
Jamie Dimon
Everybody thinks it's about data volume or complexity, but really, Chip, it's about the strategy, culture and governance.
- [00:50]
Chip Kleinxel
I'm Chip Kleinxel, host of Resilient Edge, a business vitality podcast paid and presented by Deloitte. Learn how the right data strategy can turn the data your company has into real roi. Available now wherever you listen to podcasts.
- [01:08]
Simon Jack
Hello, I'm Simon Jack, BBC Business Editor, and this is the interview from the BBC World Service. The best conversations coming out of the BBC people shaping our world from all over the world.
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Jamie Dimon
There have been so many disagreements between me and my family.
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Sitecore Advertiser
Putting on a show that is what it means to be Lady Gaga.
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Interviewer
Only the things that you can't solve.
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Jamie Dimon
With government and private sector is where.
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Interviewer
You bring philanthropy in. There's no place in the world where women are equal.
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Jamie Dimon
Every generation, every generation has to fight to maintain democracy.
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Simon Jack
For this interview, I met Jamie dimon, head of JPMorgan Chase, America's largest bank, while he was in Bournemouth, England. He oversees more than $4 trillion worth of assets, but his influence extends far beyond his bank's balance sheet. Mr. Dimon has the ear of President Trump as well as other leaders worldwide. He's even talked about as a future US president himself. Given the chance, he tells me jokingly, he'd take it and says he'd do a good job. You're also going to hear about his fears for a potential significant fall for US stock markets, thanks to what he sees as high levels of global uncertainty, soaring valuations, as well as his take on the lessons to be learned from the Russian invasion of Ukraine.
- [02:26]
Jamie Dimon
I think the world changed after the invasion of Ukraine. I mean, we haven't had a major war in Europe like that. I knew that the day after. And now other flaws are turning out that we didn't have quite the resilience we thought we had. Covid showed that, but so did the invasion. People talk about stockpiling things like crypto. I say we should be stockpiling bullets, guns and bombs. I mean the world's a much more dangerous place. I'd rather have safety than not.
- [02:49]
Simon Jack
Mr. Dimon tells me he's not a tariff guy, but if there is unfair international trade or a threat to national security, then tariffs can be a justifiable tool even if it adds to the risk of inflation. And while he agrees there will be huge benefits to come out of the current wave of investment in artificial intelligence, he warns they'll also be a lot of money that gets wasted. Jamie Dimon has been the boss of America's biggest bank for nearly 20 years. He survived the financial crisis and seen a lot of boom and busts in his time. Welcome to the interview from the BBC World Service with Jamie Dimon.
- [03:29]
Interviewer
We've seen stock markets at record highs in the UK and the US A lot of people saying that this is beginning to look a little frothy this. The bank of England said it looks, it was stretched. Valuations started to remind them of the dot com, the peak of the dot com era. What do you make of it?
- [03:46]
Jamie Dimon
Well, I don't necessarily pay that much sense which central banks say any way you measure equity valuations and even debt valuations by credit spreads being very low, it's high. It's in the 85 and 90% of any way you measure it, it is in the high category that creates another element of risk. And I personally think a lot of that's driven by the money that's been thrown into the system since COVID You know, I mean I'll give you United States numbers, $10 trillion of additional federal debt. These are global phenomena. By the way, we had 4 trillion of QE after Covid. Well that again, you know, capital and money is like liquid and that fills every crevice in the floor. That crevice could be venture capital, stock prices. But now you have it in mem stocks and some of the crypto world and gold is hitting all time highs. So yeah, I put it in the high category. But that does not mean you don't have a healthy environment that justifies it.
- [04:39]
Interviewer
You don't see a crash coming, you don't see a correction coming.
- [04:42]
Jamie Dimon
I am far more worried about that than others. So if you said now I'm talking about probabilities, I would give it a higher probability than I think is probably priced in the market and by others. So if the market's pricing in 10% I would price and I would say it's more like 30.
- [04:56]
Interviewer
And I'm not a 1/3 chance of a correction.
- [04:58]
Jamie Dimon
Yeah, I'm not saying next year. I just. Because the timing of these things is almost impossible.
- [05:03]
Interviewer
It could be what, six months, could.
- [05:04]
Jamie Dimon
Be a year, could be six months, could be two years.
- [05:07]
Interviewer
Okay, so some in the next six months or two years, you see a high probability of a correction.
- [05:12]
Jamie Dimon
Yeah, you see a lot of things out there that you know the amount of uncertainty and I put geopolitics in that category, fiscal spend in that category, politics in that category, the remilitarization of the world in that category. All these things cause a lot of issues that we don't know how they sort out. So I say the level of uncertainty should be higher in most people's minds and what I call normal. Normal always has quite a bit of uncertainty.
- [05:33]
Interviewer
By the way, if you look at some of the things that are going on in the AI in the tech space, you've got Nvidia taking stakes in OpenAI, Microsoft taking stakes in OpenAI, the federal government taking stakes in intel, there's all these cross holdings. It looks a bit weird, doesn't it?
- [05:49]
Jamie Dimon
A little bit, yeah.
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Interviewer
How would you describe it?
- [05:51]
Jamie Dimon
Well, AI is a little bit different, you know, and there are some justification for vendor finance and things like that. So you literally have to go through each one regarding America's investments. I think when people talk about stockpiling things like crypto, I say we should be stockpiling bullets, guns and bombs. I mean, the world's a much more dangerous place and I'd rather have safety than not. But there is unfair trade and then there's also national security related. And in some of those the only way to fix it might be industrial policy.
- [06:21]
Interviewer
But is it possible to tell whether you're in a bubble before it bursts? It feels like in terms of AI valuation, some of these companies like Nvidia.
- [06:29]
Jamie Dimon
And it's only possible to tell what I said in terms of very high valuations, it's really impossible to tell the burst. And I've looked at, you look at history when all the 74 crash, the 82 crash, the 87 market, 90, the Internet one, no one's really forecasting that. And there's all that hype out there and. And then you also take AI, there's a lot of money going into it. But the better way I look at it, the better way AI is real, AI in total pay off. Just like cars in total paid off, TV in total paid off. But Most people involved in it didn't do well.
- [07:01]
Interviewer
So some of this money will be wasted.
- [07:02]
Jamie Dimon
So think of the Internet bubble. I think a trillion dollars was lost at one point. You do have Google, Facebook, YouTube, Microsoft. You have huge things that came out of it that are hugely beneficial.
- [07:15]
Interviewer
But does that mean some of the money being spent right now will inevitably be wasted money in the final announcement?
- [07:19]
Jamie Dimon
Probably.
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Interviewer
Okay.
- [07:21]
Jamie Dimon
That's why when you're in our business, I'm very careful what we finance.
- [07:25]
Interviewer
Okay. You said that you would stockpile missiles. Why would you do that?
- [07:30]
Jamie Dimon
I think the world changed after the invasion of Ukraine. I mean, we haven't had a major war in Europe like that. I knew that the day after, you know, we were all lulled into a false sense of security. And now other flaws are turning out that we didn't have quite the resilience that we thought we had. Covid showed that, but so did the invasion. I think that if Ukraine does not end up being a sovereign and free nation, then Russia may very well be testing a lot of other things, which they've done recently, you know, with the drones and planes into the airspace of Estonia. Then it also will cause our allies, American allies, to say, can I rely on you? And I'm talking about Japan and Korea. I was just there. And if they can't, they have to do other things. And to me, the worst part of that is the nuclear proliferation may lead to is that all of a sudden nations may say, you know, the only thing that could really protect me is having nuclear weapons. So no one touches me.
- [08:23]
Interviewer
Let me bring it back to the financial world. When I look at things like crypto, bitcoin, price, you look at gold, some will say that is a symptom of a world that has lost faith in the US dollar, lost faith in US economic leadership. What do you say to that?
- [08:38]
Jamie Dimon
I don't think they've lost faith. I think they're questioning a little bit more, you know, and then you have about the dollar. The dollar is still the best currency in the world. The US treasury is a full taxing authority of the federal government on the most prosperous nation the world's ever seen, defended by courts, the rule of law, the United States military. That is not replaceable. I do think that, that people should think about, well, a big portion of our investments are in dollar and maybe we should reduce that a little bit. That's fine. I don't think it's going to go away as a reserve currency. There's a little less comfort in America today because of all the actions we're taking and we'll all have to deal with that.
- [09:14]
Interviewer
Let's talk about that. Because you talk in your shareholder letter saying that you're very cautious. What you seem to be really worried about is the nature of the U.S. economic and military alliances. Are you an unreliable partner in the.
- [09:28]
Jamie Dimon
U.S. no, this is very. Less reliable, Yes, a little less reliable. And so I always, and when I go to the United States, NATO needed to do more. That was a good point. In fact, I've spoken to a lot of leaders here who say, you know what, that was a wake up call and we needed it. Okay, you might have been delivered differently, but that was a wake up call. The goal should be, in my opinion, that to make the Western world stronger, militarily, more together, not question it. So, you know, we're trying to make NATO stronger and we're part of it. And all these foreign economic things, which actually more complex, you look at trade and investment and, you know, development investments, is to make the Western world stronger and better. Not to hurt it, you know, not to fragment it, to pull it together. Maybe there's some harsh medicine in that, but that would be my goal. I don't want to see the book written how the west was lost. I want to make sure our policy don't fragment what is the wonderful part of the Western world, the democratic world, the free world. And that includes Japan and Korea and Australia and Europe and the Philippines and America and Canada and Mexico. And I believe that is a beautiful thing, worth keeping whatever the flaws are.
- [10:37]
Interviewer
But you've warned before about those who would dismantle the rules based system that we've developed. And that includes institutions like NATO, the un, the imf. President Trump has attacked all of those. Is he helping?
- [10:50]
Jamie Dimon
I wouldn't put them all in the same boat.
- [10:52]
Interviewer
Okay, he's attacked some of those.
- [10:54]
Jamie Dimon
Yeah. No, but I say, I think the military alliances are critical. That military umbrella has kept the world safe and free. The UN has a lot of flaws, you know, and you know, I listen to some stuff.
- [11:03]
Interviewer
NATO, a lot of flaws.
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Jamie Dimon
No, no, no. NATO is the one that we should keep together, strength and stuff. The flaw was that European countries didn't do enough and now they want to. Which I think is great, that they're, you know, they're getting organized and coming together and making sure they do more. But some of those institutions need more than a little reform. They need a real kick.
- [11:21]
Interviewer
Okay, but you watch, if you look at Presidents Putin, Xi Modi, Kim Jong Un hanging out in China together, high Fiving each other. You know, some would say that actually.
- [11:33]
Simon Jack
President Trump has played a part in.
- [11:34]
Interviewer
Pushing those people into each other's arms. And how did you feel when you.
- [11:37]
Jamie Dimon
Saw those guys completely separate Iran in Russia and North Korea from China and India? You know, we're friends with India. They want to be friends with us. I was just over there. Modi, they're his neighbors. You know, I mean, it's very hard if you're a political leader to act like you're not going to go visit your neighbors with whom you have trading relationships and economic relationships, whether you agree with everything you're doing. So I don't look at that as that bad. I would like to bring India closer. In fact, I've spoken to several of the Trump officials who they want to do that and I've been told that they are going to do that. And I hope that's true. You're not going to get them to be non aligned. On the other hand, as long as Ukraine is a real problem, I think we should be doing as much we can to help Ukraine.
- [12:21]
Interviewer
You talk about moral power as well. Do you accept that some people think that's been weakened? And you warn failure on that score could be catastrophic. What happens if we don't get this stuff right?
- [12:32]
Jamie Dimon
You have a fragmented world. It looks a lot like it did before World War II and World War I. And nations will be looking for, you know, economic, military, security relationships. That may not be what we would like and it may not be what the Western world would like. And it could even, you know, if you look at Europe, I think the European Union is one of the great accomplishments of all time. Not World War I, World War II, but thousands of years. You know, the Hundred Years War, the Napoleonic War, the Franco Prussian War, the Spanish War, the War of the Roses. Got together in a room to say let's resolve our differences by peaceful political means. And it kind of got bogged down. I think most people know it and I understand that, but I think they're better off finishing it. You know, they have 450 million people have a common market allow I think here's one. I think banks should be allowed to consolidate across that. Now that would be tougher for us but better for Europe. In this case, you have a much stronger Europe. The people of Europe would benefit enormously from a big common market. But not every nation could have its own champion.
- [13:31]
Simon Jack
You're listening to the interview from the BBC World People shaping our world from.
- [13:35]
Interviewer
All over the world.
- [13:37]
Simon Jack
For this episode of the interview, I'm speaking to Jamie Dimon, boss of US Bank JP Morgan Chase. Jamie Dimon is a rock star of global finance. He's a billionaire in his own right and his advice is sought by business leaders and politicians around the world.
- [13:52]
Interviewer
And.
- [13:52]
Simon Jack
And yet he has a folksy kind of charm which has made many think he should be a politician himself. While he'll talk to the financial press, he very rarely does broadcast interviews. I've been trying to get him in the chair for years and I got him in Bournemouth, a fairly sleepy town in the south of England where JP Morgan employs over 4,000 people and are investing nearly $500 million in their support service functions there. His arrival saw employees packed into a town hall meeting. There were cheers, high fives, selfies. But despite the fun and high spirits and he had some deadly serious warnings about the rising economic, political and military risks facing the world. Let's return to my conversation with Jamie Dimon.
- [14:32]
Interviewer
You mentioned in your letter that you worried that there might be a bit of inflation caused by tariffs, increased probability of recession. What do you make of it so far? What are you seeing?
- [14:40]
Jamie Dimon
Yeah, so it's really hard to tell because you know, even when you negotiate 15% tariffs, it applies to half of the imports in the country and some aren't even in yet. They backed way off the very high liberation damage I thought was the right thing for them to do. So my view is it's going to add a little bit to inflation, a couple little waves probably true that it's one time, okay, but that does not mean you won't have inflation driven by fiscal spending, other nations activities, these geopolitical things around the world. So wages going up, our medical costs are going up 10% next year. That's. And we think it's going up 10% in 20, 27, $30,000 a family now. So I think there are other forces that are going to drive inflation. Tariffs is one straw on the camel's back.
- [15:25]
Interviewer
Good thing or bad thing? Tariffs generally.
- [15:27]
Jamie Dimon
Look, I'm not a tariff guy, but I try to separate when I hear people talk about if you are fairly combating unfair trade and think of China, for the most part, we think it's unfair. They're subsidizing in a million different ways. Cars, batteries. Yeah, you can use tools. Tariff being one tool. If it's national security and you have to resource insource or friend source something, I think it's a fair tool. If it's just I wouldn't agree with the ones on furniture, I don't think it matters where furniture is made. I don't think it's national security. And if we all can't buy new furniture for a couple of years, we'd be fine.
- [16:04]
Interviewer
Okay, what are the things that keep you awake at night? What are the risks out there? I think you talked a little bit about, you know, cracks appearing in the bond market. Where are the big risks?
- [16:13]
Jamie Dimon
Well, economically, I always say, I try to think what might be the surprise. The surprise would be bond rates going up because you have instead the worst thing, economic stagflation rates going up and you actually go into recession. And, you know, we've had that. You know, I've experienced that before. I hope it doesn't happen. I just think the odds are a little bit higher than the people and then geopolitics. That, to me, is the one thing, like I said, I don't want to see the book written how the west was lost. We, America and other nations started taking actions that fragmented what happened after World War II. All the Bretton woods organizations, some of which are quite good, some of which need reform, but I'd rather reform them than break them.
- [16:51]
Interviewer
But it feels like a kind of dark moment at the moment, doesn't it? I mean, where do you see us? What does right now remind you of, risk wise?
- [16:59]
Jamie Dimon
So I'm going to answer two ways. If you open a newspaper and anyone can do this of any week, of any month, of any, any year, it's pretty dark stuff out there. So it's always a high level of dark stuff. And sometimes in the current time, you overreact to that. I think it's a little worse than that because of this war in Ukraine, because of Iran and North Korea and nuclear proliferation. So I think it's a little bit worse than that. And that's what we're about. And we need really, we need good American leadership.
- [17:27]
Interviewer
Do you have that, though? A lot of people would say that America is now not the same kind of reliable ally economically, trade wise, militarily, than it has been in the past. That's hard to argue with, isn't it?
- [17:39]
Jamie Dimon
Yeah. But I would argue less reliable. Not the same thing as unreliable. We were so reliable.
- [17:44]
Interviewer
But you would accept the less reliable. You would accept the US Is less reliable?
- [17:48]
Jamie Dimon
Yes. Yeah.
- [17:49]
Interviewer
And at a crucial time.
- [17:52]
Jamie Dimon
Except, you know what? I also see the, you know, President Trump and his folks have gone this 20 point plan. I've spoken to a lot of people about it. This is good. This would be great for the world. The president does things differently. I tell people I don't comment on everything that Biden did. I'm not going to comment that President Trump does.
- [18:10]
Interviewer
And do you think this sense of uncertainty globally, is that contributing to things like the price of gold? You think gold at $4,000 an ounce and people look at that, what does it tell you?
- [18:19]
Jamie Dimon
The world's less certain. You want something that holds real currency, real value. Central banks are buying a lot more gold.
- [18:27]
Interviewer
Why are they doing that?
- [18:28]
Jamie Dimon
I don't know. I guess I'm not gold. But that's their normal job. By the way, like, America's got like a trillion dollars of gold.
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Interviewer
Well, I mean, I'll put it to you again. The people are buying gold and crypto because they think that the banking system is antiquated and it's on its last legs. They've lost faith in US Dollar leadership and they're looking for something else. And it's actually quite a dismal judgment on the economic system maybe.
- [18:57]
Jamie Dimon
And I wouldn't put gold and crypto in the same category. I'm not worried about the gold, the banking system, the dollar. I am worried about the global economy for all these various reasons. That is a reason that somebody say, you know, I'll put a little bit of gold in my portfolio. I'm not going to do it, but I completely understand why, you know, some people advise you to buy, buy some gold. I'm very comfortable in J.P. morgan. I'm very comfortable in the dollar. If most people had one, all their money and they could only put it in one country, what country would that be?
- [19:27]
Interviewer
I'm guessing you're going to say the United States.
- [19:28]
Jamie Dimon
Well, it's pretty obvious still. Yeah, it's the best economy in the world. You do whatever you want. The dollar. You can buy a house, you can build a company. You're protected by the United States, the Pacific, United States military.
- [19:39]
Interviewer
You used to say. You used to say put all your money in the U.S. no, no. Now you're saying if you could only put it in one country.
- [19:46]
Jamie Dimon
No, I never said that.
- [19:46]
Interviewer
Okay.
- [19:47]
Jamie Dimon
I think you're a pezzle of great companies are buyers right now.
- [19:50]
Interviewer
I want to ask you about Europe. You said that there's a danger that it's in structural decline in terms of living standards and relevance. You know, what is Europe getting wrong? What's the warning to Europe?
- [19:59]
Jamie Dimon
One of the numbers I look at, which is tough is it's gone from like 90% of the GDP per person, America, to like 65 or 70. And that didn't have to be. And you know, it's putting strain their debt to deficit. They have 100, the average country, 100% debt to deficit, 3.5% deficits, debt to GDP. I meant three and a half percent deficits. Very high social costs. I'm not against social costs. That's not the point. It's not that sustainable. You need. And what they talk about here, which they're all talking about, we need growth and investment and for that we need innovation. We've got to change our mindset.
- [20:35]
Interviewer
What's holding them back? What's holding Europe back?
- [20:37]
Jamie Dimon
It's all in the Draghi report. Capital markets, unions, changing some work rules, having investment philosophy by giving good news. The innovation here is unbelievable. So If I went 15 years ago to Paris, London and Berlin, you would not have had as much innovation as you have today. You still have to deal with those other issues.
- [20:57]
Interviewer
Give us some ideas.
- [20:58]
Simon Jack
Lower taxes, less regulation.
- [21:00]
Interviewer
I'm just trying to. What's the magic sauce here?
- [21:02]
Jamie Dimon
It's a little ball of it. Deregulation. Is this free one? Almost no one who's had to deal with buying a home, you know, doing construction at home, starting a small business, running a small business, dealing with anyone will tell you how much it is, how crippling it is and how it's got to change. And then you know, here like they got great universities, but you know, you need to also turn out people who've got skills. It's the skills that matter, not the degree that can do a job. And so we know what to do. Education, taxes, growth, innovation and you know, hopefully the growth will pay for itself. And then when I talk about government expenditures of any type, every government should be saying, do I spend that money wisely? So when I get involved in the United States government, I mean I can go one after another, just programs that are virtually corrupt, that money's misused, it's handed to the wrong people. It shouldn't happen that way. Governments also have to earn their strides by saying, I took your money and here's what I did with it. I told you I was going to educate kids. Like for example, I would ask high schools, community colleges, colleges to judge themselves on what are the income levels of the kids who leave your school and therefore put a huge onus to them to say, okay, I better start teach coding. And you get 12 weeks of coding and make $75,000 a year at 17. And we're just not getting it right. And of course all the bad policy hurts the low paid people the most, almost all of them.
- [22:30]
Interviewer
What next for you? You've been suggested as treasury secretary twice. At least twice as to my knowledge. Bill Ackman, the hedge fund, a billionaire, begged you to run for president. What are you going to do now? What's next for Jamie Dimon?
- [22:44]
Jamie Dimon
I don't think either those things are in the cards. I love what I do. I think you know, I'm proud of J.P. morgan. We, and we know, we just don't finance middle market and consumers. We finance stuff. States, schools, cities, hospitals, charities, governments, military. We've hired 15,000 vets in the United States and quite a few vets here. I'm just proud of the company. And this is the perch by which I can do the most to help the world. That's what I do. Obviously I have to keep jvmir and Chase a healthy, vibrant company. I don't think if you gave me the presidency, I'd take it.
- [23:15]
Interviewer
Would you?
- [23:15]
Jamie Dimon
I think I'd do a good job. But I don't think there's any chance I get elected either through the Democratic primaries or the Republican primaries.
- [23:22]
Interviewer
Would you abolish tariffs on day one of your presidency?
- [23:25]
Jamie Dimon
No. I look each one separately. What was fair, what was unfair. And I think I want them to resolve all those issues. And when I speak to certain administrative officials, they're halfway there.
- [23:38]
Simon Jack
Thank you for listening to the interview from the BBC World Service. You'll find more in depth conversations on the interview wherever you get. Your BBC podcast, including episodes with Malala Yousafzai, President Lula da Silva of Brazil and tennis great Martina Navratileva. Until the next time. Goodbye. For now.
- [24:10]
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