Jamie Dimon warns of 'storm clouds,' while telling investors to relax

JPMorgan CEO Jamie Dimon had one message for investors on the company's earnings call: there are 'storm clouds ahead.' JPMorgan coming out of the gate strong with a huge first quarter revenue beat, and a big prediction for future net interest income. The earnings call offered a more downbeat tone, with CEO Jamie Dimon using his weather analogies once again.

"The U.S. economy continues to be on generally healthy footings —consumers are still spending and have strong balance sheets, and businesses are in good shape," Dimon said. "However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks."

Dimon also discouraged the use of 'credit crunch' on the call. Although the CEO acknowledged that more challenging lending conditions are already being seen in the real-estate sector, he said bank credit overall will continue to flow despite concerns of a credit crunch, which were voiced by Chicago Fed President Austan Goolsbee.

“Obviously, there’s going to be a little bit of tightening, and most of that will be around certain real-estate things,” Dimon said. “You’ve heard it from real-estate investors already, so I just look at that as a kind of thumb on the scale. It just means the fast conditions will be a little bit tighter, which increases the odds of a recession. That’s what that is. It’s not like a credit crunch.”

Yahoo Finance's Brad Smith recaps JPMorgan CEO Jamie Dimon’s commentary on recent U.S. banking turmoil and recessionary concerns at Friday’s earnings call.

Check out more coverage on the bank earnings here

Key Video Moments:

0:00:37: Dimon on banking turmoil

0:01:15 Dimon on the economic landscape

0:01:50 JPMorgan earnings call breakdown

0:03:45 Vibe check on JPM Earnings call

Video transcript

INES FERRE: It's one thing to look at the top lines when the big bank results hit. JPMorgan coming out of the gate strong with a huge first quarter revenue beat and also a big prediction for future net interest income, but the earnings call had a slightly more downbeat tone. CEO Jamie Dimon with those weather-related analogies again. Yahoo Finance's Brad Smith was listening in. Brad, storm clouds?

BRAD SMITH: Yes, storm clouds from Meteorologist Dimon, of course.

INES FERRE: Yes.

BRAD SMITH: Well, lots to digest on the call. JPMorgan CEO Jamie Dimon had this to say on recent banking sector turmoil.

JAMIE DIMON: We're hoping that everyone just takes a deep breath and looks at what happened and the breadth and depth of regulations already in place. You know, obviously, when something happens like this, you should adjust, think about it. So I think down the road, there may be some limitations on held to maturity, maybe more TLAC for certain type size banks and more scrutiny on interest-rate exposure, stuff like that. But it doesn't have to be a revamp of the whole system.

BRAD SMITH: And so Dimon kind of mirroring Aaron Rodgers from a few years back-- R-E-L-A-X. Relax, everyone. However, let's also remember that Dimon also had some thoughts on the wider economic landscape on the call and the ripple effect of the financial system stress. Take a listen.

JAMIE DIMON: Yeah, I wouldn't use the word credit crunch if I were you. Obviously, there's going to be a little bit of tightening. And most of that will be around certain real estate things. You've heard it from real estate investors already, so, you know, I just look at that as a kind of a thumb on the scale. It just makes the financial conditions a little bit tighter, increases the odds of a recession. That's what that is. It's not like a credit crunch.

BRAD SMITH: So there's a great deal of tenor that we get in tone from Jamie Dimon and executives at the bank that takes place on the call that doesn't necessarily come through in the words and the characters that you see on the earnings results itself once it's published. And that came through from a lot of big banks this morning.

But even as you're thinking about some of the categories that perform best for them, consumer and community banking, that consumer spending remained healthy, and with combined debit and credit card sales up 10%, card loans up 21%, and how they talked about the US economy, saying that the US economy continues to be on generally healthy footings and consumers still spending and have strong balance sheets.

It's an important reminder that you could still be generally healthy, but perhaps have a sinus infection. So at the end of the day, it's where the consumer continues to engage with the bank, and the bank decides to tighten that relationship, perhaps, given the broader economic environment that the financial system finds itself in as well here. And so even as we're looking at the reaction here, pre-market, the shares were higher. You can tell that there had been a little bit more of a moderation, or at least a drift higher, in the share price reaction, as the call went forward. So amazingly critical to track what's that tick by tick is doing, even on every single word that comes through from the bank executives.

And over the course of the earnings season, it's also an important time for them to get the communication right and perhaps do a little underpromising, but overdelivering long term as well here. And that's where some of that sandbagging strategy comes into play here. But net, net for what JPMorgan did report, the shares reacted on that originally and initially. However, even as that was continued to be communicated over the course of the call, you saw that stabilized to the upside for JPMorgan, holding onto gains by about 7.4%.

So my overall vibe check here, you know what? I'm going to give this a good one. Normally, I would say, you know what? It was about three out of five because we know what they're doing here. We know what the economic environment is. And I wouldn't say that they're trying to mislead, but I would say that they are trying to play their book, or at least play some of the hits for the investors here.

That is a net good thing if you are on the JPMorgan side, or at least, looking at kicking the tires on shares of JPM. It's important to remember where they sit within this broader banking system as well. The largest bank by market cap here in the US, of course, is in a far different position than some of the regional banks that we're going to hear about and hear from later on in this earnings season. So amazingly critical to do some command F's on everything from deposits to loans and those net interest margins as well here. But for JPM and the communicatory tone from Jamie Dimon, the CEO of the big bank, they did pretty good on this earnings call. Ines.

INES FERRE: Wow, one coming from you, you're a tough grader, so that's very good. Thanks.

BRAD SMITH: No scale here.

INES FERRE: No scale.