Dimon also shared his thoughts on Bitcoin, tariffs, and succession at the company’s Investor Day.
JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon is one of the leading voices in the financial industry, and, like Berkshire Hathaway’s Warren Buffett, when he talks, investors listen.
On Monday, Dimon spoke to Wall Street analysts for about 45 minutes at JPMorgan Chase’s Investor Day, addressing questions during the Q&A portion of the event. In that session, Dimon spoke on a range of issues, including Bitcoin, tariffs, the regulatory environment, the economy, and his future, to name a few.
A subject that has been top of mind for many investors, tariffs, should stay there, despite the cool of the trade war and stock market rally.
“Trade in general, not just tariffs, has created a lot of risk out there and we should be prepared for it,” said Dimon. “People feel pretty good because you haven’t seen an effect of tariffs. The market came down 10%, it’s back up 10%, I think that’s an extraordinary amount of complacency – that’s my own view.”
Dimon believes the economy and investors could see higher inflation, even at the levels that tariffs are at right now.
“That’s pretty extreme tariffs,” Dimon said. “You also don’t know how countries are going to respond – and they are responding. They are already starting to cut trade deals with other people. And even if you wanted to bring all manufacturing back, it takes time … three to four [years], minimum, to build a manufacturing plant.”
Stagflation remains a possibility
Dimon also cited concerns with federal spending and the deficit.
“We have the largest peace time deficit we’ve ever had, almost 7% of GDP,” said Dimon. “If you go around the world, the other major countries are around 3.5% of GDP. Our debt to GDP is 100%.”
The JPMorgan Chase CEO reminded investors that the last time we had 10% tariffs, in 1971, the economy was booming and Nixon won re-election in a landslide in 1972. But inflation shot up, the economy slowed, markets tanked, and the U.S. entered a recession and had stagflation — stagnant economic growth with rising or high inflation.
While he’s not predicting the same outcome now, Dimon said the odds of stagflation are higher than most people think. And his company is prepared for all scenarios.
“The worst one [scenario] for a bank and for most companies is stagflation, which is basically a recession with inflation,” Dimon said. “The odds of that are probably two times what the market thinks … What happens is with stagflation, revenues drop, credit losses go up, and then — how do you manage your balance sheet.”
Still not a fan of Bitcoin
Dimon was asked about his thoughts on cryptocurrency and Bitcoin, given the federal framework for cryptocurrency being developed in Congress.
The JPMorgan Chase CEO drew a line between some forms of crypto, like blockchain technology, which the company uses, and Bitcoin, which he has never championed.
On blockchain, Dimon says the company uses it for several applications and will continue to do so where appropriate. That said, he suggested its utility and importance is overblown.
“We have been talking about it for 12 to 15 years, we spend too much on it, it doesn’t matter as much as you all think,” Dimon said. “There will be stablecoins, central banks will look at it, it’s going to be used for a bunch of things. Some might compete, some might not compete – we’re going to fine either way. If the technology we can use, we’re going to use it.”
On Bitcoin, while not a “fan” of it, Dimon said JPMorgan Chase will allow investors to buy it on its platforms.
“Personally, when I look at the Bitcoin universe, the leverage in the system, the misuse in the system, the ASML, the BSA, the KYC, the sex trafficking, the terrorism, I am not a fan of it,” Dimon said. “We are going to allow you to buy it, we’re not going to custody it, we’re going to put it on statements for clients. I don’t think you should smoke, but I defend your right to smoke. I defend your right to buy Bitcoin, go at it.”
Succession plans?
Finally, Dimon answered questions about when he might retire.
“The important thing about the future of the company are the disciplines and the culture in place, which we don’t speak a lot about,” Dimon said. “The board has intent – it’s not a promise, it’s not a commitment, it’s intent — and its prudent to be thinking about succession, and we should be doing that. Obviously, it’s up to the board. If I’m here for 4 more years … that’s a long time … But to me, the most important thing is, when it gets handed over, you have real teams, real cultures, and hopefully you keep on building it. If you look at the best companies in the world, that’s what they had — they continued going forward regardless of who the CEO was.”
