We'd like to welcome in now the chairman and CEO of JP Morgan Jamie Diamond, who's joining us from the Global China Summit in Shanghai. Thanks so much for joining us exclusively on Bloomberg Television. Obviously, it's been a few years since you've held this in person summit.
The last time you and I talked was that the last.
Time you held one in person in Beijing in twenty nineteen.
A lot has changed.
Why are you willing to go high profile as a major CEO of a company from America when others they want to stay low profile and keep their heads low.
How do you assess the US.
China relationship and the impact it's having on business?
Okay, well, first, all thrilled to be back again after all this time. And it's important for CEO to visit their people and their clients around the world, particularly in when you think times a little more complicated, etc. But I think it's important for the viewership to understand there are like three thousand investors here from around the world. There are hundreds of companies of Chinese and non Chinese
company he's learning about the world. We do research on five hundred companies that research circulates the world, and hopefully business could be a you know, it could be for good to help the countries lift up. I have enormous respect for the Chinese people. The Martization's countries has been extraordinary, and yes, there are some very complex issues that have to be dealt with.
At what point does Jamie Diamond have to become the diplomat? Look, Joe Biden has not spoken to Siegen Ping since November, the Bali meeting. Military to military discussions are being rebuffed and not even happening. Business to business is tenuous at best.
What role can you and should you play while you're there?
Yeah? No, I think I look at a little bit differently. So there are conversations took place recently that you know have been in the press, which I think you're great. I mean, it's hard to resolve issues when you have the echo chain in your own brain telling yourself what you already think. And I think business could be a
force for good. But I don't represent the government. But you know, everyone knows I'm an American patriot, so I'm sitting here in China, but I'm a red blooded, full throated free enterprise capitalists, and so the governments have to talk. Every government has national security in mind and how do they how do they get better announced security? And I should point out is that this globe of ours has
benefited from trade. You know, it's benefited from all these things taking place, and so it's lifted and even taking this country, you know, they have benefited. I know this criticism about the American global system, but that American global system has done an extraordinary It's not American. You know, if you go to America, a lot of Americans complain about NATO and WTO and WHO and the United Nations, but it's lifted up. Look what it's done for China.
I think that the global system has been fabulous for China. And they may have complaints about it, just like the rest of us have complaints. But I'm thrilled to be here again. You know we have you have to go see your people and thank your people what they've done, particularly through this terrible time of COVID, which I think has done a lot of damage to the world in a lot of different ways. So getting out is the right thing to do.
Yeah, what is your calculus?
Has it changed over these four years on how you want to expand in China.
Obviously you're fully licensed up now. You are very productive.
During the pandemic, you got full jvs and full ventures in securities and the mutual funds and futures. You're pretty much well established on the mainland, which was your goal. But the things have changed. China is not necessarily the be all end all anymore. We've had simultaneous crackdowns domestically on the platform economy, on property, on online gaming, on online education, not to mention COVID zero, you have a
crackdown on consultancies. There's lots of pressure. I mean, are you recalculating your growth projection and the capability of that growth in China?
You went through a long list there which I may not win agree with all of it, but I think when we do visit a country, and we do visit one hundred countries around the world, we are there for the systems of the country, and we're there hopefully through good times and bedtimes. We tend not to leave other and there's war, civil war, and so we're not predicting any of that here. You know. Obviously it's become a
far more complex situation. You know, for some for good reason, some not for good reason, and you know there's risk. There's always going to be risk, and I think you'll see companies react to different things for different reasons, some of their own resiliency. Some is obviously national security, you know, will trump all other things. So you know, our government tells us to do AB and C, We're gonna do
a B and C and support it. And I think there's there's a risk in China itself that you know, if you I've met with several people here, if you have more uncertainty, some are caused by the Chinese government. Well, of course it's gonna not just change foreign direct investment, which has gone up a little surprisingly, and I don't think they should assume that's continue, but it's going to change the people here, their own confidence, their own ability
to invest and do things. And so, like I said, if people have deep conversations, respect each other, engage properly. I think the American government said all the right things recently, which is cause you heard it from Treasury Secretary Yellen, You've heard from President Biden. You've heard it from National Security Advisor Jake Sullivan, you heard it from Secretary as day Tony Blincoln that this is not decoupling. This is de risking. The world's changed a little bit. Obviously, they
are concerned about the war in Ukraine. They should be. I think that is probably one of the most serious things affecting the future of the globe, and I mean the future of glow for the next fifty years. And I think they're doing the right things. I'm completely supportive of that. So you know, China's obviously going to do what they think is good for itself. And business might be a positive attribute, but national security will trump all our issues.
Now. I was just at G seven where we heard a lot of that rhetoric where they're de risking, not decoupling. But again, you know the Chinese say it's one and the same. It's America trying to limit China's rise, and you've seen that bifurcation.
There's more jargon.
Not to overemphasize all this jargon that's going out there, But again, do you see d risking different from decoupling totally?
I mean, look, you know, Stevie, I look at the fact trade actually went up and last year, and I think d risky means national security. You know, everyone's gonna do every country's gonna turn out their own way. You know, now we're talking about very advanced chips. We kind of reasonable, you know, not to help non allies have things that can help their military. You know, obviously there are you know, rare earths and things like that, so American is going
to look at that. They were very clear they term about it. They used the word, you know, a small guarden with high walls as opposed to everything, and let's you know, we should hope that, let's not make it everything. I think the business Comunity is trying to help advise them, and that then there's going to be companies doing things just for their own resiliency. That's a perfectly reasonable thing
to do too. And then there's the big one, which is also this constant negotia about trade on fair trade, free access, fair access that's been going on with for my whole life is about every country and countries should learn about when they're legitimate concerns and when they're not legitimate concerns, and like listen to it deeply and adjust accordingly. So if you ask me, over time, yeah, there'll be
less trade. You know, it'll take years for these things to take place, but it won't be a decoupling and the world will go on. I think, like I said, I think far more important is what's happening in Ukraine right now, and so hopefully this will sort out and it'll never short out if you don't talk. So I urge people you have some real deep conversation. You get to know each other a little bit, a little bit each other's concerns about some of these issues, and things would be better if we have that.
Well, do you have these conversations as well, because a lot of people do try to extrapolate what's happening in Ukraine with the potentiality in East Asia with Taiwan. We know Warren Buffett has divested completely its investment Berkshire Hathaway's investment in Taiwan Semiconductor. There's nervousness and that creates hesitancy for investment and fun flows which are down. Obviously trade
deals are down. Do you see the direct correlation of the risks that have risen in East Asia because of Taiwan, because of what's happening in Ukraine exacerbating that?
Yeah, I think. Look, I'm not an expert on Taiwan, and I would defer to Bob Gates and Henry Kissinger about how to de escalate that situation and obviously as to the tension things like that. But remember this is a world issue. All the country around the world would be concerned about Taiwan and the outcome of that. I think what Ukraine showed people is that the world wasn't safe that you know, oil and gas supply chains aren't safe, food supply lines aren't safe. You know, everyone's starting to
relook at what is national security. Had Germany important, I think, was half of their natural gas from Russia. So I think that did cause people look at what are their alliances, what are their trade what are the things? And obviously it's causing a lot of confusion and a lot of issues. But hopefully we'll make a lot of progress on it. Like I said, that comes with engagement, and that comes with you know the one the American government and other folks, you know, city down.
Yeah.
I don't want to keep on harping on the negative side of it, but is there any scenario, the worst case scenario that would make your investment, and look, it's a sizeable investment in China, make it untenable for you?
You know, Steve, you're going here you're going to repeat yourself over and over. We're here, We're going to support the Chinese people, of the Chinese governments. We do business with a thousand companies here. Half are multinationals, coming in half are local companies. You know, we always have managed our risk that we can handle almost whatever happens around the world. And I am an American patriot. I will do what my government tells me. I'm going to salute
like anybody else. But I can tell them what I think, and you could imagine that I've been very clear when I sit down with them what I think and what we think matters. And like I said, a lot of the business community think would be very helpful in that this is not a simple matter, and sometimes we oversimplify things in a way which actually damage, you know, the ultimate outcomes.
Will you have an opportunit unity?
Can you reveal whether you're going to meet with Lee Chong, the premiere or any of the other senior Chinese leaders, and what would you like to get from them.
I'm I'm me a very limited amount of Chinese leaders. I met with one by I'll keep that conversation private, and like I said, you know, I'm here for our people. I'm here for these clients. I think it's great that this is taking place. I think humanity is better off this type of thing. And obviously national security will reign supreme and so. But but you don't stop doing one because of the other. And so, like I said, I'm
thrilled to be here. And it's amazing, which I've what I've seen take place in Chino the last twenty five years partially because of the global system, and I think they should be clear about that. And you know, they have their own problems here. You know, twenty percent unemployment and youth. I mean that's a scary number. And so you know, growth, they need growth too, and confidence is very important for growth.
When do you see cross border deal making picking up? It's been quite a nator on that front.
Course, border between China and other people are just globally.
Right, Well, let's let's talk about China, say China US or outbound from China and the like.
Outbound you know, I don't know the answer to that. I think there are always a lot more conversations, you think, and obviously it's been damped a little bit. I think America is still open for business, you know, Chinese company's gonna be a little concerned. You know, we've we've had siphias for a long time now. But I would say
we're still generally open for business. And if you're in a Chinese company you want to do something, you know, look at it, don't back off just because you're afraid of something, and you get some advice and helping how you go about that the right way. But America is still open for business, and I think you've heard that from Secretary yelling, Secretary blinking, and all those Still we still believe in, you know, open and philly free markets.
Let's pivot to what's happening in the United States. Obviously, the debt ceiling impasse is coming to head, perhaps with a House vote coming up. Can you kind of tell me what your war room, your debt ceiling war room is advising you on the unintended consequences a of a default or even buh, the ramifications even if a deal is done in Congress, on whether that could mean you know, higher rates as well as we head towards a possible mild recession.
So I, first of all, I think I think Kevin McCarthy, Kim Jefferies, the President, Chuck Schumer, Miss McCabe all did a great job, and I think it's great. This is this is democracy and bipartisanship, and I think they did the right thing. And I think it's going to happen. If I thought it wasn't going to happen, I probably wouldn't be here right now. Uh So, And obviously it's got to get through a couple of votes in Congress, and our people pretty comfortable will happen. You know, I've
been We've been public for years. If if you actually an actual default, it's not good. You know, America, the financial as system America, and the econom economy of America, it's still the most prosperous and largest economy of the world've ever seen, the most innovative, the most growing, and the rest of the world relies on it, you know, So I think we shouldn't create any instability there. So I wish one day we'd get rid of the whole
debt ceiling thing. But I understand, when you know, it's a democracy, people have different opinions about what we should be doing, and it's just one tool for one party to you know, get the other part of the table. So I'm quite optimistic there, and I really do applaud the fact that they all sat down and spoke got something done.
What's your read on inflation, on whether the FED will go beyond the pause and hike again.
You know, my simple view is that you know, their right to pause at this point has been a big increase, you know, five hundred basis points to so take a pause. But I do think it's possible they're going to raise a little bit more. Then the inflation is kind of stickier. I think people are coming around to that, which means race may have to go up a little bit more.
People should be a little prepared for that. There's just as a matter of manage your own business, be a little prepared for, whether you're a financial company or real estate company, etc. I think the other thing I'd be a little prepared for is the volatility that might very
well be created by quantitative tightening. We've never really had quantitative easying, which we've had now for the better part of fifteen years, and now you're going to see quantitative tightening, and I think the effects may be a little harsher than people expect. But hopefully we'll get through all of that and'll be okay.
How would you assess the banking crisis whether we're still facing a banking crisis. Obviously you come from a very interesting purge having taken over a first Republic. Do you see more pain coming down to what needs to be done on the regulatory front to prevent this from happening again.
Yeah. So the first thing is it's nothing like, oh wait, there's nothing like that. Leverage in the system private the private companies are in actually very good shape. The banking system is in pretty good shape. You've seen regional banks just report very good numbers. The deposits didn't run out like people are talking about. This is nothing like that. There are a couple of banks that are offside this I to have size and industraight exposure and things like that,
First Republic being one of them. We were asked by our government to step in, and we did, and we were able to handle it. I'm extremely proud. I hope Jen Peepzak and Marion Lake will looking at me now like what you all have done. Get an airplane Sunday night to fly out talk to people. You know, obviously it's a lot of work and you know, hard for people, but we're trying to show real humanity, you know, using redeployment of anyone who lose their job is try to
find other jobs. At JP Morgan or elsewhere we had the cability to handle it. I think it's also assigned by the way, because we totally support community banks, we totally support regional banks. I would be carefully think what regulations have to be done as opposed to supervision, and we want them to do well. So I want to be very careful people go about that. So these this banking system, you know, we acknowledge their community banks do a lot of things we can't do. And so I
think there are a critical part of the system. But so is a JP Morgan. You know, we bank small companies, large companies, We bank the IMF, the World Bank, we bank these stools, states, hospitals, We bank companies in thirty countries, you know, And so there's a reason that you have both large and small and all different types. And so I think we're over this part of it for the most part. There may be something else, but rising rates,
if they get high enough, it canreers uglyhead again. And so I think, like I said, it's not just banks. People should be prepared for slightly higher rates than they've been used to in the past fifteen years.
Are there further redundancies necessary associated with First Republic? We knew we were going to get a plan from you guys by the end of the month. It's the end of the month. We know, maybe a thousand jobs cut, but there's seven thousand employees there. Is there anything you can reveal on what further tightening is necessary as you integrate that bank.
No, you know, I think the thousand bud it was less than what they had planned to do in their own And we need a lot of people, and you know, we have a lot of you know, we hire a lot of people. Hear, so I use the word redeployment. We're hoping that almost everyone who might lose their job, you know, and there might be some more, but almost everyone we could say, hey, we have this other job for you in the same city, you know, or or something like that. So you know, we're pretty good at
that and hopefully we can provide opportunity. You know, we welcome the First First Republic people of a company. We're treating them with great humanity. I hope we're going to learn a lot from them. You know, very often when you do a do like this, you know people are angry.
We're not. I've never been part of a company. We didn't buy someone, merger someone where you don't learn somebody from both sides, and so you know they have this wonderful wealth uh business, you know, in banking and wealth management, and you know we're we have a few things to learn and do. I mean, I've never seen I've gotten so many emails from very happy customers and that's a great thing. So what can we learn and what can we do better? For JP? Morgan Jayson.
Now, Jamie, I know last week you talked a lot about succession or about your position that you're not talking about retirement right now. I do need to ask you though, And your name has been bandied about for years about public office. I mean, I don't think Wall Street's too pleased about the potential Trump versus Biden runoff next year. Is it any has that scenario ever crossed your mind that you would run from public office or even accept a cabinet position.
You know, obviously it's crossed my mind because people mention things to you and stuff like that. I love my country and maybe one day I'll serve my country in one capacity or another. But I love what I do. I think, Jade, we're going to do a great job for helping Americans, helping countries around the world. And this is my job. This is what I'm going to do, and I'm quite happy doing it. I still have the
energy to do it. I mentioned you know that when you don't, I think people should give up the job. I've got a fabulous management team what I really enjoy working with. So I'm here.
David Diamond, thanks so much for your time. I'm Blueberg.
Thank you.