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All right, we're wasting no time.
Let's get straight to our exclusive conversation with Jamie Diamond Shaman and CEO of JP Mantt and Chase Jimmy cand Have you with us, and thanks for having us here.
Happy to be here.
The bond market is front and center. We're seeing yields at the highest levels in decades. Yet we see the stock market keeps rallying in factice again in the money today.
Should we be notice or not?
Well, I think it's always reasonable in the investment world to be nervous a little bit because you've mentioned the opening. There's a lot of geopolitical risk. You have a bunch of wars going on, which I hope are properly resolved. You have bond rags going up. Inflation is a little bit higher than people thought. So yeah, but I'm not surprised. I think when people say you should be surprised bond raigs can go up, the notion that somehow people said
they'll never go up is the wrong notion. And so companies like us prepare for higher rates, lower rates, and you know, figure those things can happen. So the thing is.
There at the highest level in decades. I mean that is where the surprise could be.
I think they could be much higher they are today. Oh yeah, And you know you say decades, but we've had like one of the greatest bullmark other than brief COVID. You know, since the Great Financial Crisis, we've had a huge bull market, huge uh lower rates for the most
part for a long period of time. But the world changes, you know, like we may have gone from a savings glut to a to not enough savings, you know, and you know the AI investments you come about in America loan four and fifty billion last year, seven and fifty this year, a trillion next year. Global deficits that are all time highs and they are huge. So the government's including ours, has to borrow huge sums of money more
next year than this year. So you know, people who owned bonds, they tend to look at these things and both inflation and you know, demands for capital can push up rates.
The thing is, it's not just an inflation story right now, it's also I guess credibility story, right I mean, we we have off an environment where everybody's trying to pay debt and governments around the world have so much debt at a higher level.
I mean, at some point it's going to hit.
Yeah, it is going to head. Like the US government debt is thirty trillion. The average rate is three and a half percent, you know, so even today they can't possibly refinite it, finance it at lower than that rate. They have another two trillion dollars to do this year. So yeah, But the thing is, we don't know when we don't know when the world gets too scared about that, when inflation makes it, where people don't want own long term duration securities, and where it's just a demand for capital.
There have been examples in history where there's so much demand for capital rates are going up. But it's very good reason people are making productive investments in the world. Government spending is often not that government spending is much more consumptual later, which doesn't help future productivity. So all that spending too drives corepate profits, so people should be that surprised that core profits are doing quite well too, which helps obviously the stock market.
The question, I guess, if I could get you to live in the crystal ball right at what yield would that be spillover to the economy, to policy, to markets.
Yeah, so I'm very questions about crystal balls, because I don't think anyone has a crystal ball. We look at all potential possible outcomes, and you'd be surprised from recessions with inflation, from recession with no inflation, from your home price is down forty percent, of stock right down forty percent. It's a wide range of outcome. I think when people think this is our forecast, that that's what's going to happen,
I think that's an intellectual error. I think you should be much more thinking about range of outcomes, possibilities, probabilities, and for us, we want to handle all of them so we can serve our clients. So I'm not that worried about, you know, our profits going down in the stock going That doesn't worry me at all. I want to serve our clients and do a good job. And I do worry about the geopolitics for the future of mankind.
That's a far more important issue in my mind. But just looking forward, I think it's a pretty my own view and it's just different than other people. Is that race can easily go up more and credits, breads can go up more.
I know everything's going to be okay even with the rates going on.
No, at one point you can have a lot of people who have to refight higher rates. So there's this general assumption that, oh, I can refi all this debt at roughly the similar rate. Well, if credit breads go up, people, companies and governments will have to pay more, and so that can put stress in the system and easily could cause a recession type of thing. Again, I'm not terrified at recession other than you know, hurst people will get
laid off. But I think as a scenario that's a very possible scenario.
There are risks people have cult time on the credit market. If heels continue to rise, there'll be a lot more pressure on the credit market. How might that play out.
Oh, a lot of companies are levers. There's you know, there's five six trillion dollars of levers loans out there. They're gonna have a hard time refine at those rates. The equity values will be considerably less. Some will be prepared for it, some hedge for it. A lot of people didn't hedge for it, so which means that people don't think about But that means to take an interest rate risk, you know, and that they should be very
cost to take interest rate risk. And so as you said, this could put pressure on the system high yield.
That's been so much demand for it, never mind that inflation is sticky.
Is this worrying or not?
Well, you mentioned at the top there's a little bit of exuberance in the marketplace. Personally, I'm not a buyer of credit spreads. I am not that instruy what other people do. I would not buy credit spreads at these levels, and you know other people have other views. But a lot of people out there, remember they have passive, passive funds buy it. You know, people have to meet indexes.
A lot of reasons people have to buy, and they're just trying to create a little bit of outfit for themselves as opposed to would you go absolutely long credit spreads or not? So I would have a luxury saying we don't have to enough. Of course, we're in the business, so we continue to make loans that I think may be more stressed than people think. But that's part of a long term strategy. That's not because I like it at this price.
But the thing is so much demand. What's behind that demand? Is it that complacency?
I suppose yes, But demand changes. You know, people forget sentiment. If you look at you know what happened before the crash of seventy three, the crash of eighty two, or the bond market in ninety four, the crash of two thousand or eight. That was all true. And then things change, and even the things change about when people talk about liquidity, Well, what happens when things get tough is sentiment changes and
people want more cash. And you know, so the liquidity requirements change, money supply changes, central banks change, banks pull back and that all can you know, pull liquidity of the market precise the wrong time and when people need cash they sell risky assets. So you might predict that all we have no but I wouldn't be surprised if that happens.
It's not just about markets, it's about AI. It's about tech.
I mean, you know, jefpy Morgan has come up to say it is actually a tech company that just happens to be a bank. You have a huge tech budget. I think nine billion dollars three billion for twenty million, and then I think three billion for cybersecurity. Talk to us about how you're mobilizing the capital a party.
So we don't actually deploy capital by saying we'll put capital there. We and everywhere we do in every business we grow in China like here, if you look at just China, we've gone from banking ten companies to banking I think it's two or three hundred. We've gone from banking thirty multinationals coming here to banking six hundred multinationals coming here. And as we serve them, it deploys capital. So the deployment of capital, deployment loans are an outcome
of building the business. That's true for every country. It's true we open branches in the United States, it starts to demand capital as people will give us deposits, we start to make loans. So we are pretty Comforanty. We get deploy capital intelligently serving clients. We don't deploy capital like an investor saying, oh, this is the best place to put it. It's kind of an outcome of how we kind of grow with the business.
And always us ay I though, I mean how are invested?
Absolutely AI, if you would any business meaning we have and we've been doing it for thirteen years, and every business meaning you have, we talk about how you can use technology do better job for your clients. What are the projects you have? So we're using AI for risk fraud, marketing, design, document management, who you should call in the morning, salesforce type things, branch location, hedging, and it's a tip of the iceberg. You know, it's moving very very quick coding,
it's moving very quickly. So we want to just stay up there and use AI to serve our clients. And we're going to do that. How can I do a better job for our clients using a technologic called AI, just like we did it with a technology called digital, a technology called cloud, and way back at technology called mainframe. Like it's no different. We got to do a better job for a client because that's how we compete.
So how will Jimmy Malgan look like in three to five years and on the back of developments in AI?
How will what?
How will Jimmymugan look like? I mean, how will are your business?
I hope with thriving? But what's not going to change? People would have to hold money, movement and invest money, raise money. I think how it happens? Will I change? You know, we use blockshain. There may be more blockshain being used to do that. There may be more people in AI jobs and less people in certain jobs, you know, so it'll all morph. But that's our job to serve
the client. And of course, you know, I always point out that we in the old days, we had you know, the big banks were big competitors and the investment banks and that was global, different banks in every country. Now it's fintech in every country, and they're good. You know, a lot of these people in Revolute Stripe and Citadel, they're quite good. So we have to compete with all and a lot of that competition will be technology and AI. So we are investing that money to be competitive to
do a better job for our clients. And if we're not fast and nimble, we'll lose.
And you're false and nimble, right.
Sometimes we're faster and nimbal Sometimes I feel like we're I feel like we're a dinosaur and elephant riding a bronco.
It is about menpower.
In the end, we've had the license power menpa, women power.
It's about the workforce.
We had from Sena Chanta shedding about eight thousand jobs of a spread of three years. We also had metas saying it's shutting the same number of people. I mean, how are you looking at manpower, women power? How are you looking at the workforce on the back of you know, advance is being made an effort.
The most important thing is we do a good job for our clients and use AI. Will it change the structured jobs? Yes?
Will?
I think there's been very few announcements are AI related. I think a lot of coming to too much bureaucracy, and they may use AI to cover up the fact that they should never hire those in the first place. But AI is going to change jobs, I don't know. I think we'll overdo some of our jobs down the road.
I don't think you'll be all different types of jobs, and you have to deploy it at a level like I think we'll be hiring more AI people and probably less bankers in certain categories, and it'll make them more productive. So when you get up in the morning and you want to interview someone, it'll lay out what I've said in fourteen different places. They'll give you questions. Your job will be the same, you'll just be much smarter how you execute that job. So, but we will retrain and
redeploy people. You know, we have ten percent attriction a year, which means our headcamp's going down twenty five thirty thousand a year, and we are We're gonna be prepared to say, Okay, we love these people, they're great, We're gonna take care of them. We're going to give them reskilling, new skills, better jobs, move them somewhere else, maybe early retirement, and then I think society maybe need to do a little bit of that, get prepared. In my view, that's got
to take place locally. So some jobs are across a nation, like AI and cyber and maintaining certain types of equipment and cars. Other jobs are very specialized. You know, this is a mining town, and that's a car manufacturing town, and that's a chemical town. And so the local schools and that's I mean high schools, community colleges, and colleges should work with the local businesses say I'm going to give these kids certificates in the twelve weeks or one
year of training they need to have that job. There are going to be eight million trade jobs which pay one hundred thousand dollars a year available in the United States in the next five years. So we're not helpless. We just have to get prepared, kind of have a plan. The plan is if it happens too quick, it may not, but I might view whatever you think there might be a risk, prepare for and if it doesn't happen, so be it used to. Most of the stuff you did in preparation you should have done anyway.
I just want to be clear.
So yours is basically about natural attrition. You're not looking to n downsides because of the efficiencies of an E that's going to happen.
It will cause that, but you know that's that happens, and that's been having my whole life. I mean, if you look at all our jobs, they've always been changing how you do jobs. But we will do it to do a better job for clients. And yes, it will do some jobs. We know that. I can't tell you specifically what because you know it's kind of at the
early stages. It is every app every process, every job will be affected, some will be more productive, some will be not enough jobs and then will help our people have a good career.
Jimmie, there's been a lot of backlash on social from what stunshot CEO The Winters said. He talked about how you know AI will wipe out the lower value human capital. And a lot of people took issue with how clinical and how cold and how perhaps insensitive that was.
Can you weigh on that?
I mean, Builds a friend of mine, and all of us say something incorrectly, He's already come back into you know, taking that back. It was an artful way to say something. But I also think it'll be old jobs. I don't think it would be higher level, lower level. I think it'll be more than you think. But it will also create some jobs, so you know, in some ways of you if you know, back office jobs disappear, we need
more front office jobs to cover more clients. So so look, you get a lot of noise from this ice O, the backlash and data centers and AI. I do think it's incumbent about us society to think through if it happens too fast, what do we do about it. You aren't going to stop at all, you know, and you can talk all you want, do the work, get prepared, take care of your people, take care of society, and I think we'll be okay.
We hear that you'll be speaking to New York mayor, Ma'm donnie along with David Solomon of course we know he wants to increase taxes for the wealthy in the city. What's the message you're sending him. What will be your conversation with you?
No, I did be with him, and I told him, you know exactly all of the great things that Jap Morgan does, the employees, the taxes, the philanthropy, the biggest in New York, the biggest fofordable lender, how we take care of our people, how they all get medical or minimum wage of twenty five, just so he understand, and that a lot of what we do in New York is exported around the world, so it's a huge export for the United States, a competitive avantage for the city,
any competitive avantage for the United States of America. And there were good citizens and we always have been known. And we talked about affordable housing and childcare, which are his two things. Well, of course, you know, anyone I know thinks we should do more affordable housing. But I told him it's a smart policy that gets that. You can say it all you want, but if you watch governments, they do some things that have the absolute opposite effect
what they say. And I can go through exacts. The same for childcare it's got to be then right, it's got to be effectively, it's got to be place based, it's got to work, it's got to be thoughtful and stuff like that. Every city. But he had read my chairman's letter and we went through that every city. He has to compete, and they have to compete at every level arts, science schools. That is what it is. I'm
not inventing that he can be an id logue. He has to compete too, And we'll see will he learn that he's got to make the city a place where people want to grow and build and live and have families and work. And he's got to compete with Shanghai and Hong Kong and Singapore and Nashville. And people vote with their feet. So it isn't this morality thing that people talk about. It's like, are you building a great
city of lower crime and stuff like that. Howls. I want to point it out that I did mention to him because it's important to me that I am against racism of all types, including anti Muslim racism, anti Jewish racism, which I considered anti semitism, anti Jewish, and I think Israel has a right to have a state. So I think there's a little confusion between anti Semitism. So you may not like what a country's doing. I don't like
what i Ran is doing. It doesn't make me anti Muslim, and so I think we have to be a little careful of this. But why, I want to be absolutely clear. And he acknowledged it, and he said, I think he kind of agrees.
I want to go back to the Texas that she wants to impose. At what point do you think those taxes will make New York less competitive? At what point do you think you know there'll be an erosion of talent within the city.
I think it's already doing that, you know. And my letter I pointed out that these are just numbers. JP Morgan when I got there, had thirty five thousand employees in New York City and now it's twenty six thousand. We had twelve thousand in Texas and now it's thirty three thousand. That is because of individual taxes, corporate taxes, state taxes, but also the schools in Dallas. They've become very good. The life in Dallas. You know, the Dallas mayor calls up all the time saying what can I
do to help you out. I have land over here, I have you know, And that is pro business and pro people love living there. And that's what New York City. New York's a wonderful place too. But that is a result when I grew up in New York City. And this is an amazing number. In the seventies they had one hundred and twenty of the fortune, five hundred were
in New York City in those ten years. Are about those ten years, sixty left or failed or immerged out, mostly because of things like taxes and crime and stuff like that. And those are big names like ge Ibm, American Airlines, you know, and and is that what you want? You know? And that's what it sees people even want. They think that somehow being anti business is going to help the city. It's not. So we all want to pay fair taxes. Not that's not the point. But at
one point people vote with their feet. And there are a lot of studies that have shown that all these people moved out, and they they're obviously the tax obviously in New York booming, so you're not gonna see it this year's taxes, but a lot of people are paying billions dollar taxes left. Why do you want that? How does that help the lower paid person in New York?
Just one final question before we let you go.
I also want to hear these people talk. But they say fair taxes, fair share, what do they mean? Like, I agree with the fact that, you know, if up to me, I saw Jeff Bezos, who I love, schmash buckling, you know, fight, I don't think the lower people make it under certain amount have been a tax at all, you know, I would agree with that. But when they say fair share, what do they mean? I mean they should give a number and say that's a fair share. So we'll see.
So what do you make of the beef he has mcdoney has with Ken Griffin. I mean, there's been a lot of pushback as well.
From my view is I need to speak to him about that. I think he realized he made a mistake in naming Ken, vilifying a name and a person, and you know Villa and even Villa, you know, my grand perhaps with all Greek immigrants. Okay, you know, I've been working my ass off now for a long time. I think vilifying people, simplifying arguments, you know, even if you think it's politically is a bad idea. And I think he probably realizes that was a bit. It's probably why
he's seeing a bunch of us now. And I'd like to maybe have a better relays with the business community. But we'll all be doing to the same thing. What does he do. I don't care what he says. What does he do? I will judge that and so well what actually happens, because you can have you can talk about morality and ideology all you want, but if things
don't get better, you didn't do a good job. And my view, and I'm talking about him now, I have seen mayors who make statements and they make it worse and worse and worse, you know, and they don't know they can't get in the details of why why is the foible housing not there anymore? Why does not work?
You know?
And so I you know, hopefully he'll learn. I want him to do a good job. I'm not against him.
So, Jamie, I've been REMISSI not to ask you about China. We are in China, after all, we saw that. I guess one chemistry between the two leaders, just you being as role Donerald Trump, does that change your perspective on China? And perhaps you know the appetite for investments here.
Not really. Look, I think I look, we have China and America have real differences, and I think these wars also highlight that, you know, America, we want Ukraine to end up as a free and democratic date. You know, I'm not saying I don't know about the war, but I'd like to see i Ran end up without nuclear weapons and no one controlling the straits of her moves. And so object to the notion that somehow Iran was in the threat. They've been killing and murdering people for
forty seven years. That's not a threat, okay. And a lot of Americans, a lot of Muslims, a lot of Jews, a lot of other people. They've been having proxy wars, you know, for forty I don't know why you allow these proxy war thing. So that makes it more complicated. But put Taiwan aside, America and China a lot in common, okay. We want to help our people. You know, you've this
country's grown dramatically. I think that's a wonderful thing. We have a lot of common interests and anti terrorism, anti nuclear proliferation, proper the proper control of some of these ai thinks that can damnage society. So they should engage all the time at every level. You know, work out the trade differences. There were gonna be some real differences in that, and then you know, have a good proper relationship. I think it's good for both pay I think it's
good for the world. You know, the world has got to deal with these two huge, powerful countries and we should help each other. And they help the world and so well. So I like the fact that they did, like PLoud, they're doing it.
What's the biggest rust for the Chinese economy right now?
You think the Chinese economy. You know, they've been very smart imagine their economy for years. But I would say too much reliance on exports. They know that that's been their plans. That's that irritates a lot of the countries around the world. I think that there are neighbors around the site China see are getting quite upset with about their behaving the South China see, not because of anything that America does and trade. We should work out trade
in a way that doesn't damage the global economy. So but I look, they've been quite and also some of the cap allocation in real estate and some of the local stuff. But my experience with the Chinese that they kind of know these issues and they kind of go about attacking them strategically correctly over time.
But is there a sense that China has become somewhat of a safe haven given you know, all the chaos elsewhere in the world.
Yeah, but it's yes, but it's somewhat artificial. I mean, America is still a safe have. I mean just we just surprised people, you know that recently. But we're still probably one of the safest countries in the world, the best investment destination in the world, the most secure rule of law. When you give you a dollar, you can do whatever you want with it. But China has become
a large, important country and I applaud that. I'm not against that, and they, of course think that they're more they're more consistent with other countries that've been true a little bit recently. That's not forever, that's recently.
But is that changing the perception of investors though? I mean, are they looking to China.
As a little bit But if I was an investor, I'd always be looking at place like China, you know, have you know, when you look at China, when any investor comes here, you just have to be impressed with their cars and their batteries and their solar and their machine tools and their capability. So of course that's how investors are seeking out opportunities around the world. There'll be plenty of opportunities here.
I've been messaged and I was still to wrap it up. Jamie all is at Playure like if you're joining us on jamis Folks Shaman and CEO of JP Mogan Chase