Topic: Jamie Dimon says ‘brace yourself’ for an economic hurricane (Read 281 times)

Don't be so sure that it won't haapen. There are already some companies, like Tesla, that have announced that they are laying off 10% of their work-force this year. Coinbase has started rescinding those applications that have already been approved/accepted. Recession is merely starting ser. The Fed will keep tightening, raise rates, and shrink their balance sheet until something breaks before they start easing again, lowering rates, and expand the balance sheet.

JPMorgan Chase CEO Jamie Dimon says he is preparing the biggest U.S. bank for an economic hurricane on the horizon and advised investors to do the same.

“You know, I said there’s storm clouds but I’m going to change it … it’s a hurricane,” Dimon said Wednesday at a financial conference in New York. While conditions seem “fine” at the moment, nobody knows if the hurricane is “a minor one or Superstorm Sandy,” he added.

“You’d better brace yourself,” Dimon told the roomful of analysts and investors. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”

Beginning late last year with high-flying tech names, stocks have been hammered as investors prepare for the end of the Federal Reserve’s cheap money era. Inflation at multidecade highs, exacerbated by supply chain disruptions and the coronavirus pandemic, has sown fear that the Fed will inadvertently tip the economy into recession as it combats price increases.  

While stocks bounced from a precipitous decline in recent weeks on optimism that inflation may be easing, Dimon seemed to dash hopes that the bottom is in.

“Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” Dimon said. “That hurricane is right out there, down the road, coming our way.”

There are two main factors that has Dimon worried: First, the Federal Reserve has signaled it will reverse its emergency bond-buying programs and shrink its balance sheet. The so-called quantitative tightening, or QT, is scheduled to begin this month and will ramp up to $95 billion a month in reduced bond holdings.

“We’ve never had QT like this, so you’re looking at something you could be writing history books on for 50 years,” Dimon said. Several aspects of quantitative easing programs “backfired,” including negative rates, which he called a “huge mistake.”

Central banks “don’t have a choice because there’s too much liquidity in the system,” Dimon said, referring to the tightening actions. “They have to remove some of the liquidity to stop the speculation, reduce home prices and stuff like that.”

The other large factor worrying Dimon is the Ukraine war and its impact on commodities, including food and fuel. Oil “almost has to go up in price” because of disruptions caused by the worst European conflict since World War II, potentially hitting $150 or $175 a barrel, Dimon said.

“Wars go bad, [they] go south in unintended consequences,” Dimon said. “We’re not taking the proper actions to protect Europe from what’s going to happen to oil in the short run.”

‘Huge volatility’

Last week, during an investor conference for his bank, Dimon referred to his economic concerns as “storm clouds” that could dissipate. Presentations from Dimon and his deputies at the all-day meeting have bolstered JPMorgan shares by giving greater detail on investments and updated figures on interest revenue.

But his concerns seem to have deepened since then.

During the response to the 2008 financial crisis, central banks, commercial banks and foreign exchange trading firms were the three major buyers of U.S. Treasurys, Dimon said Wednesday. The players won’t have the capacity or desire to soak up as many U.S. bonds this time, he warned.

“That’s a huge change in the flow of funds around the world,” Dimon said. “I don’t know what the effect of that is, but I’m prepared for, at a minimum, huge volatility.”

One step the bank could take to gird itself for a coming hurricane is to push clients to move a type of lower-quality deposit called “non-operating deposits” into other places, such as money market funds, for example. That would help the bank manage its capital requirements under international rules, potentially helping it absorb a surge in bad loans.

“With all this capital uncertainty, we’re going to have to take actions,” Dimon said. “I kind of want to shed nonoperating deposits again, which we can do in size, to protect ourselves so we can serve clients in bad times. That’s the environment we’re dealing with.”

Banks having a “fortress balance sheet” and conservative accounting are the best protections for a downturn, Dimon said.

The bank has shied away from servicing a lot of federal FHA loans, he said, because delinquencies could hit 5% or 10% there, “which is guaranteed to happen in a downturn,” Dimon said.

‘Shame on you’

Dimon went on a tear during the hourlong session, barreling through topics like a “greatest hits” of his observations and gripes, often letting loose with profanity.

He lambasted investors for voting along with proxy advisors like Glass Lewis, which has disagreed with JPMorgan’s board on recent matters including executive compensation and whether the bank should separate the chairman and CEO roles in the future.

“Shame on you if that’s how you vote,” Dimon said. “Seriously, you should be embarrassed. Do your own homework.”

Companies are being driven out of public markets “because of litigation, regulation, press, cookie-cutter governance,” he added.  

Meanwhile, other critics often conflate stakeholder capitalism for being “woke,” Dimon said.  “I am a red-blooded, free market capitalist and I’m not woke,” he said.

“All we’re saying is when we wake up in the morning, we give a s--- about serving customers, earning their respect, earning their repeat business.”

https://www.cnbc.com/2022/06/01/jamie-dimon-says-brace-yourself-for-an-economic-hurricane-caused-by-the-fed-and-ukraine-war.html

Even though I know all the economic indicators are signalling towards an economic squeeze I doubt that there will actually be one. Prime reason for that is because generally when a news about a recession is so public in news everywhere there generally is no recession coming in because people will invest carefully after reading these news and big whales don't really want this. When there is a hurricane coming by the news will be, market will recover from here, good times about to come and such positive news. If you see the past trends of depressions this has been a trend always.

It seems the current era will be defined by the polar opposite to QE (quantitative easing) which they are calling QT (quantitative tightening). With a claimed $95 billion a month in reduced federal reserve bond holdings. With the fed officially being recognized as one of the largest holders of US bonds, that shift could have a significant affect on markets.

JPMorgan Chase CEO Jamie Dimon says he is preparing the biggest U.S. bank for an economic hurricane on the horizon and advised investors to do the same.

“You know, I said there’s storm clouds but I’m going to change it … it’s a hurricane,” Dimon said Wednesday at a financial conference in New York. While conditions seem “fine” at the moment, nobody knows if the hurricane is “a minor one or Superstorm Sandy,” he added.

“You’d better brace yourself,” Dimon told the roomful of analysts and investors. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”

Beginning late last year with high-flying tech names, stocks have been hammered as investors prepare for the end of the Federal Reserve’s cheap money era. Inflation at multidecade highs, exacerbated by supply chain disruptions and the coronavirus pandemic, has sown fear that the Fed will inadvertently tip the economy into recession as it combats price increases.  

While stocks bounced from a precipitous decline in recent weeks on optimism that inflation may be easing, Dimon seemed to dash hopes that the bottom is in.

“Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” Dimon said. “That hurricane is right out there, down the road, coming our way.”

There are two main factors that has Dimon worried: First, the Federal Reserve has signaled it will reverse its emergency bond-buying programs and shrink its balance sheet. The so-called quantitative tightening, or QT, is scheduled to begin this month and will ramp up to $95 billion a month in reduced bond holdings.

“We’ve never had QT like this, so you’re looking at something you could be writing history books on for 50 years,” Dimon said. Several aspects of quantitative easing programs “backfired,” including negative rates, which he called a “huge mistake.”

Central banks “don’t have a choice because there’s too much liquidity in the system,” Dimon said, referring to the tightening actions. “They have to remove some of the liquidity to stop the speculation, reduce home prices and stuff like that.”

The other large factor worrying Dimon is the Ukraine war and its impact on commodities, including food and fuel. Oil “almost has to go up in price” because of disruptions caused by the worst European conflict since World War II, potentially hitting $150 or $175 a barrel, Dimon said.

“Wars go bad, [they] go south in unintended consequences,” Dimon said. “We’re not taking the proper actions to protect Europe from what’s going to happen to oil in the short run.”

‘Huge volatility’

Last week, during an investor conference for his bank, Dimon referred to his economic concerns as “storm clouds” that could dissipate. Presentations from Dimon and his deputies at the all-day meeting have bolstered JPMorgan shares by giving greater detail on investments and updated figures on interest revenue.

But his concerns seem to have deepened since then.

During the response to the 2008 financial crisis, central banks, commercial banks and foreign exchange trading firms were the three major buyers of U.S. Treasurys, Dimon said Wednesday. The players won’t have the capacity or desire to soak up as many U.S. bonds this time, he warned.

“That’s a huge change in the flow of funds around the world,” Dimon said. “I don’t know what the effect of that is, but I’m prepared for, at a minimum, huge volatility.”

One step the bank could take to gird itself for a coming hurricane is to push clients to move a type of lower-quality deposit called “non-operating deposits” into other places, such as money market funds, for example. That would help the bank manage its capital requirements under international rules, potentially helping it absorb a surge in bad loans.

“With all this capital uncertainty, we’re going to have to take actions,” Dimon said. “I kind of want to shed nonoperating deposits again, which we can do in size, to protect ourselves so we can serve clients in bad times. That’s the environment we’re dealing with.”

Banks having a “fortress balance sheet” and conservative accounting are the best protections for a downturn, Dimon said.

The bank has shied away from servicing a lot of federal FHA loans, he said, because delinquencies could hit 5% or 10% there, “which is guaranteed to happen in a downturn,” Dimon said.

‘Shame on you’

Dimon went on a tear during the hourlong session, barreling through topics like a “greatest hits” of his observations and gripes, often letting loose with profanity.

He lambasted investors for voting along with proxy advisors like Glass Lewis, which has disagreed with JPMorgan’s board on recent matters including executive compensation and whether the bank should separate the chairman and CEO roles in the future.

“Shame on you if that’s how you vote,” Dimon said. “Seriously, you should be embarrassed. Do your own homework.”

Companies are being driven out of public markets “because of litigation, regulation, press, cookie-cutter governance,” he added.  

Meanwhile, other critics often conflate stakeholder capitalism for being “woke,” Dimon said.  “I am a red-blooded, free market capitalist and I’m not woke,” he said.

“All we’re saying is when we wake up in the morning, we give a s--- about serving customers, earning their respect, earning their repeat business.”

https://www.cnbc.com/2022/06/01/jamie-dimon-says-brace-yourself-for-an-economic-hurricane-caused-by-the-fed-and-ukraine-war.html

Elon Musk thinks the same thing, it's not just him: https://www.reuters.com/technology/exclusive-musk-says-tesla-needs-cut-staff-by-10-pauses-all-hiring-2022-06-03/ He's planning on cutting his staff and pausing hiring because of what the economic projections look like. Not that Elon Musk's word should be taken with unequvical certainty, it just gives you an idea that many of the industry heads believe the economy is headed for a downturn. I agree with you, JP Morgan is probably no different than any other large banking institution, but the signs of economic hardship aren't conspiracies. High inflation in the US and EU region, slow recovery post COVID, and the war in Ukraine putting harsh strain on resources with an already strained supply chain plagued with shortages all point to a rough global economy incoming.

He actually admits this in the article quoted too, the man professing himself as a "red-blooded, free market capitalist".

I don't consider myself woke at all but that doesn't mean I think his school of Wall Street Wolf is the way to run things.

Those fines you mention? They and banks like them pay them willingly. I have someone close who says they even budget fines into their annual spending... they hire expensive consultants to work out what amount of fines they should be expected to pay. Simply because it's more profitable to pay fines than to not profit.

I hear few banks ever get that budget line into over-expenditure. That's because enforcement simply can't catch up to their misdeeds.

Jamie Dimon is one of the most corrupt human being on the planet, and runs one of the most corrupt companies on the planet.  JP Morgan Chase bank has over 36 BILLION dollars in fines just since the year 2000 ( https://violationtracker.goodjobsfirst.org/parent/jpmorgan-chase ).  The guy would sell his own mothers soul if he thought it would benefit Chase.