[Market Opinion] From Jamie Dimon

Jamie Dimon says chance of a bad economy is ‘higher than other people think’

JPMorgan Chase, the largest bank in the United States, kicked off earnings season Friday with a beat, but also a warning about geopolitical threats that could hurt the global economy.

The bank’s first-quarter revenue increased by 9% from the year before, to $41.9 billion. That’s more than analysts surveyed by FactSet had expected.

Earnings per share came in at $4.44, also higher than the $4.17 estimated by FactSet.

Still, CEO Jamie Dimon warned investors that trouble could lie ahead. “Many economic indicators continue to be favorable. However, looking ahead, we remain alert to a number of significant uncertain forces,” he wrote in a press release Friday.

Dimon cited growing geopolitical tensions and “persistent inflationary pressures, which may likely continue,” as ongoing worries.

“We do not know how these factors will play out, but we must prepare the Firm for a wide range of potential environments to ensure that we can consistently be there for clients,” he said.

On a call with reporters Friday morning, Dimon said American consumers still have excess savings, stocks are higher and unemployment is low. “Even if we go into recession, they’re in pretty good shape,” he noted. But he also said that lower-income earners are quickly running out of extra money. The bank is beginning to see some cracks in the subprime auto loan market.

Dimon, calling in from an investment banking conference in Florida, told reporters that he believes market pricing is likely “too happy” right now and that the chance of a bad outcome is “higher than other people think.”

But, Dimon said, “the important thing isn’t the economy — whether we have a mild recession or soft landing or something like that,” he said, referring to a scenario where inflation is vanquished without raising unemployment levels. What’s important, he said, “is the future of the free world,” referring to Russia’s war on Ukraine.

“It could be determinative on what happens to the global economy if oil and gas prices go too high,” Dimon said.

The impact of ‘higher for longer’ rates

JPMorgan Chase acquired most of First Republic Bank’s assets last May after the San Francisco-based regional bank was seized by the government.

That acquisition added billions of dollars in loans to the bank’s balance sheet, boosting its income from interest.

JPMorgan Chase reported that average loans had increased 16% from the year before, mostly because of First Republic. Net interest income, or NII, from those loans (that’s the money a bank earns from loans minus the interest it pays on deposits) increased by 11% to $23.2 billion.

But the bank also said that NII could fall short of Wall Street expectations for the year.

Net interest income has been a key metric for analysts this quarter as they look to see how banks react to elevated interest rates by the Federal Reserve.

Banks, including JPMorgan, have brought in record profits, boosted by NII, as the central bank raised interest rates.

JPMorgan Chase also said on Friday that it would take a one-time $725 million charge by the Federal Deposit Insurance Corporation related to the mess that Silicon Valley Bank and Signature Bank left in the wake of their collapses last spring. It was large banks that mostly footed that bill.

Shares of the bank fell by 4.3% in morning trading but are up 45% over the last 12 months.

Mixed earnings

Separately, investment giant BlackRock reported that its assets under management swelled to a record $10.5 trillion during the first quarter. The company also beat top- and bottom-line expectations.

Wells Fargo, which also reported its first-quarter earnings Friday, topped Wall Street’s expectations but saw an 8% decline in net interest income from the prior year. The company also noted a $284 million expense during the first quarter related to the FDIC’s special assessment.

Citigroup reported net income of $3.4 billion in the first quarter, or $1.58 a share, outpacing analysts’ expectations for $1.18 a share, according to FactSet. CEO Jane Fraser said Friday the bank finished its organizational restructuring, which included layoffs, last month. The company saw $225 million in restructuring charges during the first quarter, largely driven by severance and other corporate reshuffling costs. Citi also noted a $251 million expense related to the FDIC’s cleanup of the regional bank collapses last year.

Shares of Wells Fargo were up slightly on Friday morning while shares of BlackRock and Citigroup fell.

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摩根大通首席執行官傑米·戴蒙在銀行公布第一季度積極財務結果的同時，對全球經濟前景表達了擔憂。雖然摩根大通的收入同比增長了9%，達到419億美元，超出了預期，每股收益為4.44美元，也超過了預期，但戴蒙強調了未來經濟可能麵臨的挑戰。他指出，盡管當前經濟指標仍然樂觀，但他警告說存在許多重大不確定性，包括不斷增長的地緣政治緊張局勢和持續的通脹壓力。

戴蒙強調了為各種可能的情況做好準備的重要性，以確保無論經濟狀況如何，銀行都能持續支持其客戶。他指出，盡管美國消費者通常因為額外的儲蓄和低失業率而有一定的經濟緩衝，但低收入者開始感受到財務壓力，這在次級汽車貸款市場中尤為明顯。

在一個電話會議中，戴蒙對當前市場的樂觀情緒表示懷疑，認為對負麵經濟結果的風險被低估了。他認為，即使經濟出現輕微衰退或軟著陸等情況，並不是最重要的事情，重要的是“自由世界的未來”，特別是俄羅斯對烏克蘭的戰爭對全球經濟的影響。他強調，如果石油和天然氣價格過高，可能對全球經濟產生決定性的影響。