Jamie Dimon has a lot on his mind. And Dimon’s mind isn’t something he’s shy about speaking.
On Tuesday, he delighted the CNBC faithful with an exclusive interview chock-full of entertaining soundbites, including crypto criticism that might’ve walked out of a Charlie Munger scolding.
“Why do we allow this stuff to take place?” Dimon wondered, of crypto. It’s a good question, and one I’ve posed repeatedly here since April, after coming away aghast from a three-month unguided tour of Web3. He called crypto tokens “pet rocks.”
He also weighed in on the macro outlook. Dimon grabbed all manner of headlines earlier this year when, during off-the-cuff remarks at a conference sponsored by AllianceBernstein, he told the audience that although it was “kinda sunny,” there’s a “hurricane right out there, down the road, coming our way.” The only question, he said, is whether “it’s a minor one or Superstorm Sandy.”
That was in June. Fast forward six months and it’s still pretty sunny. Becky Quick, looking obsequious in the presence of money as usual, referenced the hurricane remark. “I didn’t really say that,” Dimon told her. (Yes, he did. It’s on camera. Everyone saw it. The quote above is verbatim. You can look it up for yourself.)
Dimon’s stormy macro outlook over the summer was set against a generally upbeat take on consumers, as delivered during JPMorgan’s earnings calls this year. At one point, Mike Mayo pressed him on the ostensible discrepancy. “Jamie, you said a hurricane is on the horizon. But today, you’re holding firm… acting like there’s sunny skies ahead,” Mayo mused, during the bank’s Q2 call. “You’re out buying kayaks, surfboards, wave runners just before the storm. So, is it tough times or not?” Tempted though I’m sure he was, Dimon restrained himself and offered a measured answer: “We don’t… pull in and out of markets through storms,” he told Mayo. “We manage the company. We invest, we grow, we expand, we manage through.”
On Tuesday, Dimon cautioned that inflation may soon erode Americans’ savings buffer built over the pandemic. “I don’t know” if the storm clouds could become a hurricane, he said, suggesting a “mild recession” could hit in 2023 in part because “inflation is eroding everything.” “That trillion and a half dollars [in savings] will run out sometime mid year next year,” he warned. “[It] may very well derail the economy and cause a mild or hard recession.”
According to Fed data, Americans are sitting atop trillions in liquid savings above and beyond what they held prior to the pandemic, but the lowest-income consumers now have considerably less than they had in Q4 of 2019. The savings rate is loitering near record lows (figure below).
Meanwhile, credit card usage is on the rise, as are credit card rates, a potentially perilous dynamic. An update on consumer credit is due Wednesday.
For now, though, consumers are doing ok. “If you look, consumers are spending 10% more versus last year and 40% more than pre-COVID,” Dimon noted. “Companies are in good shape too, by the way.”
Naturally, he expressed confidence in US banks. “The American banking system is unbelievably sound in a million different ways,” he emoted. “Our capital cup runneth over.”
I’m not sure that’s the best way to endear yourself to average Americans struggling with generationally high inflation, but Dimon isn’t the apologetic type, and he seems to genuinely believe that banks are, in fact, engaged in “God’s work,” as Lloyd Blankfein once put it, jokingly.
Coming back to crypto, Dimon called the space “a complete sideshow.” My guess is that in private, “sideshow” isn’t the word he uses.
You must be logged in to post a comment.