People want to hear from JPMorgan (JPM) CEO Jamie Dimon. He’s insightful, provocative, and never boring.
So it's little wonder that the company puts him on calls with wealthy clients to give his take on, well, just about everything, which is what Dimon did this past Tuesday.
Here are some curated highlights of Dimon's comments, which, believe me, could've gone on for quite a bit longer!
'There are storm clouds'
It is a strong economy. Consumers’ balance sheets are in good shape. Businesses are equally in good shape. When you forecast, you have to think differently. What is out there? There are storm clouds. Rates, QT, oil, Ukraine, war, China. If I had to put odds: soft landing 10%. Harder landing, mild recession, 20%, 30%. Harder recession, 20%, 30%. And maybe something worse at 20% to 30%. It is a bad mistake to say 'here is my single point forecast.'
On inflation, confidence, and IPOs
The numbers are so distorted when you have this fiscal and monetary stimulus. Have you seen a recession where unemployment is going down? [Inflation] is around 8%. I don't see it will dissipate that quickly. I think the Fed had 4% by the end of the year. I think that is highly unlikely.
If you ask the question, how are you doing? What are the prospects for your company? 'Oh, pretty good.' If you ask them about their confidence, it is low. I think because of inflation, because of partisan politics and a lot of leftover anger from COVID-19. I wish we had the spirit that we were all here to work together but it seems we just got nastier somehow. [CEOs'] biggest complaint is they can't hire people.
I think people make a mistake when it comes to IPOs. 'My company's worth $20 a share and you want to sell at $17, I'm not going to do it.' Those prices are set by a lot of conversations, a lot of sophisticated investors. I wouldn't worry as much about that valuation. People take it very personally, but they shouldn't. You should be very mature about that.
China and Putin
China has serious issues. Our neighbors are peaceful. Mexico, Canada. Their neighbors are India, Pakistan, Russia, Vietnam. They don't have enough energy and food. We do. We use 10 million barrels of oil a day. We pretty much produce most of it themselves. They use 14 million a day and they import something like 10 or 11. Those 10 or 11 are going by pipeline or ship. A lot of ships that go by the oil tankers go by American warships.
Autocratic management can work in certain things, but doesn't work in the long run. They kind of look at America and say, 'you have been incompetent and lazy.' There is truth to that. We have screwed up infrastructure. We have screwed up inner city schools. But I think it is a mistake to say that America has the short end of the stick.
We have the best military in the world, but we have overused it. You see what China is doing in Africa and Asia. We need to do that, too. America needs to take a leadership position. People are making a mistake [with the] the America First [thinking], we're spending too much time and money on foreign ventures that don't make sense. If we don't do trade with Western allies, China is going to cherry pick every nation. They'll give them 5G equipment for cheap. They'll negotiate deals, lend money. They are trying to do it in Latin America. Our backyard.
I think [China is] overreacting a little bit with this Taiwan thing.
[The Russians] are using energy as a choke hold on Europe. They are going to freeze Germany. Putin is sitting there playing chess. This is serious stuff.
We should focus on climate. The problem with that is because of high oil and gas prices, the world is turning back on their coal plants. It is dirtier. Why can't we get it through our thick skulls, that if you want to solve climate [change], it is not against climate [change] for America to boost more oil and gas.
It is rare that an election either mid-term or full presidential election actually changed the nature of the American economy in the short run. Rare. So in terms of investing, I'm not sure it matters that much.
A lot of people are inefficient with E-mail, phone calls, reading. They are always hurried. They should be thoughtful about their calendar. They need to take care of themselves.
Don't get into this binary thing where you're looking at Fox or CNN. Read the other side. Some of your fellow citizens have good reasons to believe something different than you do. I try to think sometimes about where are they right? Not are they wrong. You'll become a better thinker. And you earn peoples' respect. By telling the truth, being a team player. Team player doesn't mean you don't complain. It means you complain if we are doing something stupid.
Pitfalls of Zoom
You have to look at the flaws of the Zoom world. It doesn't work for an apprenticeship program. It doesn't work for spontaneous stuff. Management by Hollywood Squares slows down honesty and decision making. That disappears when you do it from home because at home you tend to say, okay, we'll pick this up tomorrow. People laugh when I say it. I never did this, but a lot of people at home on a call are texting each other, sometimes saying what a jerk that person is. And we say we want diversity. When you come [to work] it is a rainbow room. But if you live in certain parts of our country and go eat out there, it is all white. You're losing opportunities to meet other people. I think they are cumulative negatives.
Competition and Apple
Apple, Google, Facebook, they are going into [financial services]. Apple has been the most aggressive. Apple Pay, if you use their phone you have to use Apple Pay even though legally you shouldn't have to. And they are doing their own buy now, pay later. They have a white label credit card, [with] Goldman Sachs.
Companies talk about acquisitions like that is what is going to save them. It's not. What is going to save us is organic growth. Better products, better services, better bankers, better technology, hiring and training better people. Organic growth is harder and better than acquisitions. Most companies don't do it because growing a sales force is hard. Opening branches is hard. Most people come up with a million reasons why they don't do it.
Family wealth and mortality
Sometimes the kids of powerful rich people are spoiled. I hate spoiled kids. I was very careful with [my] kids. I probably sat them down for the first super serious conversation eight years ago. I have had a couple near death experiences and I wanted to set everything up.
You can ignore the bad part of society. Not hire from them. Not drive through the parts of town. I think it is a mistake because our society is worse off if we don't lift up everybody. It is far more than woke capitalism. It is a good thing to lift up our fellow citizens. You travel the world and see things that work. Apprenticeship programs in Switzerland and Germany. If you have generations of kids 17 to 25 with 20% unemployment, you can be sure you're going to have a social problem. Jobs bring dignity, household formation, jobs reduce crime. Everybody should try to help if they can.
I never sold a share of [JPM]. I bought shares. I still buy my own stocks. I don't have many. I don't have any long-term Treasuries. I think Mexico is going to be a great set up. I bought a Mexican ETF. Did you know their labor is cheaper in Mexico than in China? And it is a secured supply chain. If you are a manufacturer, it is a no-brainer. Green infrastructure will be big.
Mentors and Ted Lasso
I have learned by watching people, reading people. I learn a lot by reading history books. Abe Lincoln: “I'm sorry I wrote such a long letter, I don't have time to write a short one.” I like the thing if you have a little bit of a temper, which I still do a little bit. Lincoln would get an angry nasty note and put it in his drawer, never to be seen again.
We have mentoring. Doesn't always mean the mentor will give you the best advice. I think people should seek out other people to learn from so you have a network of people that will give you feedback.
[Someone asked me]: 'Do you show gratitude to your direct reports?' And the three direct reports burst out laughing. Like, really? Not a lot. But they do know I trust them, I break my back for them and deeply love them. I gave them all a little pink box with biscuits in it to show some gratitude and they appreciated it. Next week I came in, I said, 'I gave you that box, you appreciated it.' You know what occurred to me? Ted Lasso is giving the box to the boss. They don't give me that either.
This article was featured in a Saturday edition of the Morning Brief on August 13, 2022. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Follow Andy Serwer, editor-in-chief of Yahoo Finance, on Twitter: @serwer