Let's go now to London.
We're JP Morgan, Chairman and CEO. Jamie Diamond joins Bloomberg de Lisa Abrahmitz for an exclusive interview. Lisa, Katie, thank you so much, really appreciate it. I am here with Jamie Diamond at the Tech Stars conference at the Novo Hotel in London, and we're going to get into a bunch of different things, a lot of the questions that people have, but one main question is we're seeing the sort of explosion in tech.
A lot of people are pausing it.
How are you sort of seeing the advancements that are most important so far and going forward? What's most excited?
What's the most exciting for you? So, first of all, welcome everybody, thrilled to be here. You know, first of all, you got to look at tech in the big picture. It's been changing society for one hundreds of years with agriculture and printing and steam engines and electricity and the internet and tech rows in itself. You know, the Internet caused ABNC semiconductors, and girla glass caused the iPhone, and
so this is another wave. We're here in London because we call it the tech the tech comes here, but it's also dasper. Now if you went back ten years, it was mostly in the United States and concentrated in Silicon Valley, Boston, New York. Now it's everywhere. You know. We have a tech center in Berlin, Glasgow, UH, Edinburgh, and I whish. I think it is great you have
more innovation taking place. I think it's really important for Europe. Uh. And obviously the thing now is all about AI and AI which I think is real and it's gonna change an awful lot of things. Can you mention one other things? There's always been a fear of tech that's gonna take away jobs, but you gotta look at the big picture, and sometimes it does. But in the big picture, it is why mankind has gotten better and better, lives longer, GDPs go up, PRODUCTIVY goes up, health gets better, work
hours go down. So be able to keep in mind the benefits are huge. We probably have to find a better way to help the people get hurt by it.
So you talk about the people who are getting hurt by it. And in a previous interview, when you were talking about how it's gonna reduce some.
Jobs and it's gonna create others.
Which jobs do you expect to get eliminated and which jobs do you expect to get created.
Yeah, we don't really know yet, you know, I mean, we shouldn't put our head in the sand. We know it can be true. So a lot of jobs. Your job will be enhanced. You'll get more research, more questions, more he is you'll have like a real super assistant chief of staff on your shoulder and you wake up, but you're still to be interviewing people. You know, other jobs.
It will handle you know, error rates or you know, it already hedges our trading equity floors and it's already been used for risk fraud marketing hasn't really eliminated on jobs, but it created effect this in terms of productivity by you know, reducing fraud losses and so and then you know, if it changes jobs and operations and elsewhere, we'll deal with it. You know, we have turnover twenty percent a year. We'd love to retrain people, redeploy the re educate them.
And so I'm not worried about it. And if it works with the customer and the client, we can kind of do more. That says for successful company, if you're growing and expanding, you're actually almost always getting jobs. So you know, to me, I want to have a successful company and we'll deal with whatever the downside is of AI.
So I was speaking with another head of a major US bank who is saying that hess his bank to keep growing in terms of business, in terms of assets, but stay the same size when it comes to staff. Do you feel the same for JP and Morgan?
I don't. I don't really know to tell the truth, and I don't like try to predetermine that. So if you look what we're doing, we're still opening branches. We're still opening branches and cities around the world. We've added a thousand people in AI itself. You know, we're adding people in data scientists. Journey to the Cloud got forty four thousand yeers. So I think we can see is some down some up in general. If we're growing company, I would expect to go up a little bit in general.
Typically, the Tech Stars is a conference for a lot of founders start to test the waters for IPOs, potentially look to go public. There's been a deterrence to really going public as quickly as in the past, particularly for tech companies, just because there's so much private capital out there.
Do you still see that.
Is that a structural change or is that something that's cyclical just having.
To do with race. It's a complicated subject. Yes, there's private capital, and I think it's a good thing that people can raise money in the private capital markets, you know, but it's a little odd that, you know, public markets are quite elevated and IPOs haven't come very much yet. So but part of it is they have access to capital, parts they're waiting. Part of it is they reduced their own cash burn they don't need as much cash. So it's a whole bunch of reasons why they're not going public.
But I think eventually you do need healthy public markets to have people look with fire their positions, which all the venture cabs and lunch with a bunch of venture capitals they all are going to want to do is actually need to do at one point. So do you expect that to pick up in the near future.
Do you think it's going to remain needed for the frustration.
I don't know. I honestly don't know. I think it may very well stay muted, because you know, markets may come down as opposed to just go up endlessly, and they may find other sources. So when I speak to a lot of private equity and private cap, private venture and stuff like that, they tell you they have more non public sources. I do think it's very important that our policy make us understand, you know, because even here in the United States, we've made it hard to go public.
You know, we've eliminated research on smaller companies. We've you know, we've the costs so much higher. Those litigation expensive to higher. You know, filing with the SEC is higher. So I think it would be really incumbany of us trying to make it easier and cheaper to go public, allow more of risks to be born in the public markets. And we've got to figure out way to do that. We actually have ten takeaways from lunch where I want to take a good look at it.
So that raises a question of where people are going public. And we're here in London, which has behind a number of other areas, particularly New York, and has lost cloud in other areas too, especially since Brexit. Do you think that this is just a momentary blip or do you think that just on a broader level, London is kind of losing a bit of its cloud.
Is a major financial center. So I think Perchull, I love the fact if you listen to the current labor government, they're talking about growth, investment, markets, capital markets, and they do need to do those things to help her recover. If they didn't do those things, no, I think it will become more permanent. Then you know, a lot of people they go to. The United States is more liquid.
You know, it's easy to do, I mean and so or they have a lot of business there, and which also making this in a great business environment will also help companies going public here. But right now the Nasdaq or York Stock has change. They're just more attractive places to go, and we'll see how that pans out. I think it's important we want to help them do better here, and I'm not in favor of just advantage in the
United States at the expense of Europe. But I do think that Europe needs to focus on Mario Drogis report. There are a lot of things in there that they need to do to get productivity back and growth back and markets back. They need to capital markets Union, for example, which they've been talking about for years. They actually do really need it to foster growth around European countries.
On a broader level, just aside from the London market. What kind of activity do you see in the pipeline for fourth quarter? I mean, do you see for luctance by companies to really engage with major actions because of the election, because of potential volatility, because of geopolitics, or do you see it really ramping up?
Yeah. So I've always you know, we always about back and I always told by Opia be careful because backlogs tend to grow and expand and stop. There's a pretty good backlog growing of IPOs of companies. You know, whether it happens or not is a different thing. And M and A yes, I do believe I can prove is more anecdotal. That is tampered quite a bit by not the election, maybe the election, but by rules and regulations. And we took to a lot of boards of directors here.
You know they're talking about is that is the risk capital there you can take the risk. They want to be very conservative in the United States. It's more about you know, can you wait eighteen to twenty four months to close a deal? And mean that creates a lot of risks for a company, you know, particularly if you go to banking. I know a lot of the banks. I think they should be allowed to do deals. They're very, very reluctant because they can't wait. One of the last
bank to the necessaries took three years. And I think if rem there's a ninety day regulatory requirement, well obviously that's not taking place anymore. And we do have to fix these things. You want an active, healthy M and a market just quickly. Not all bad for competition, even though I think it's true in certain cases. But you know, we just become like an anti M and a country, and that's a bad idea.
Okay, Just let's say that there's somebody else in charge of the FTC and there are some different kinds of rules and sticks that people have to advance over. How much consolidation do you expect in the banking industry?
So for the FTC, and I want to make very clear about this. You know, say to you know, to hammer, everything is in nail. They're a little bit like that. But that doesn't mean they aren't right about certain things they say. I just want to separate that. Look, I think there are four thousand banks the United States. They're in a different position. You could be a very profitable community bank. So I don't think the idea you have
to merge is true. But if you're competing in a certain business for certain clients and certain sizes, you may need kinds of scale, and you know they should determine so you do need consolidation. A lot of the mid sized banks want to do it. They shouldn't be hampered, you know, and they would tell you if I can't do it, you're basically seeding the ground to JP Morgan, and I
think that's unfair. They should be allowed to merge. The boards of directors should be allowed to make that decision based on what they think is the best interest of the shareholders. You know, this notion that government should get involved in every single little bank, do you like? He's just wrong, And you know they're adding social values to
everything they do. It should be about safety and soundness, and a board of directors that says we need to merge, we want to merge, probably means that heading for a safe and sounder bank, that's their desire. You can give a lot of examples where it doesn't work. It doesn't mean it shouldn't be allowed. And I think we've got to be a little more open about letting these things take place and letting them take place quickly.
Aside from just some of the regulatory overhang, there is this question about how much in general the markets are going to open up, and a lot of that has to hinges on the hinge on the economy. You mentioned earlier that you are more pessimistic about a soft landing. I think you gave it a thirty five percent probability back in April.
Do you still think that or do.
You think that the probability has gone off with some of the good data that we've been getting.
Yeah. No, And the important I'm not talking about forecasting twenty twenty five, and I just think there's a lot of moving parts, a lot of things in the future, which inflationary these you know, the most important thing taking place of these wars overseas geopolitics, you know, they're terrible, humane suffering, you know, but also the the you know, a bunch of these countries acting in cahoots against Western interests, against Israel, against Ukraine, against the United States, and that's
really serious. So I can look at a long amount of serious things. Soft layings are hard. I hope it happens. I don't know. I just wouldn't count my eggs in that one. And markets are open. When you say open, they're very you know, values are high, they're not low, both equities and bonds. You know, credit spreads are very low. So they're open, but people are standing. Not open for i pos, so some IPOs when we just did one of the larger word of the year like last week.
They're open for those who the market wants to buy today, you know, but don't assume that they're not open. And you know, sometimes people would go public they don't like the price. That's a very different thing, and you should think twice about that when you think you know where the company's worth much more than the market might know.
That maybe it's sort of an assessment of what you're looking for rather than the actual market being closed. You know, you said that there are a lot of inflationary things that are coming down the pike. Do you think that it was a mistake for the Fed to cut by fifty basis points?
Oh? Actually, I mean you gotta separate the hear and now inflation has definitely been coming down. You know, they don't wanna go into recession. Unemployed has been going up, They raised race, they were late raising rage, but they raised it very high, rapidly to five percent of I think it is the right thing, and they're right to take their foot of the guests in that one. I don't think it matters that much fifty to twenty five, honestly,
but I think that was okay. If inflation comes back, I'm looking at future things, the remilitation of the world's inflationary, the physcal deficits of the world between United States inflationary, the green economies, inflationary, demographics are inflationary. Uh, it's very possible. Energy prices down the road. I'm talk about two or three years of inflationary those will hit later. You know, they should react at that time to those things, but they h I don't think you can anticipate that. We
don't know that that's going to happen. I'm so glad you grow up the deficit. I watched the Treasury auctions. There's another three year one today.
I watch them every time, wondering are we going to start seeing disruption from some of the concerns that yourself that you bring up, but also every single investor who I speak to is it's the same thing. Are you surprised that the market hasn't priced in a higher structural deficit in the way of higher yields or at least more volatility, at least at auctions.
Yeah. Well, I have a lot of comments that one. Commodity markets often though, price things in so they actually happen, and so it hasn't happened yet, you know, the higher inflation, the higher structural stuff. Even though the deficits are there, there's also sentiment inventory supplying demand of you know, of
capital good. So it's very hard to say. But that's why I think that longer rates may actually stay here and tick up a little bit as opposed to go down because of these huge deficits in the United States and then the markets reacting with the word you used of volatile or something like that. It's not always bad. I mean, I think we overreact sometimes to volatile markets, but I do think they'll happen again. Your dealer inventories are very low. Banks of the big market makers are
very constrained. Not today, I mean, we have this anomaly where j Moore is going to have a trillion dollars of cash and unable to intermediate treasury markets to repail markets completely conservatively because we're required to hold that cash in very you know, like central bank reserves something like that. So I think when q E, if I gets to a certain point, you will see that I may be wrong. And again, if it happens, I don't think it's disaster. It's not bad for JP Morgan. I do think policy
makers will get upset. They don't like seeing that type of thing, and I think they're fixes to it, and I think there's sharp we're going to fixes today.
Something that you said about how markets sometimes don't respond until an event, is there Commodity markets Commodity markets, well.
So think of stock markets are forecasting earnings and cash out five years and ten years and always adjusting it and their buyers and sellers and equity prices adjust. But if you look at commodity price action, well, sometimes it's forecasting the future. Actually is looking at supplying demand today. So the most important is supplying demand today with some sentiment, some inventory. How quickly you can replace supplying demand. So all commandiers are different. But think of the treasures a
little bit as a commodity. Well do you.
Think that treasury is especially if you look at it as commodity, which is a wonderful way to look at it, that there is sort of a catalyst in the election with respect to realizing what the deficit could be.
Yeah. Look, I people are making charts of what everyone said and what it might mean for the deficit, what they said and what they actually do and actually have their completely different things. I'm not going to worry about that. I think you should worry about. The deficit today is seven percent of GDP. When Vulgar was around, we had very high inflation was three and A hadred percent. The debt to GDP thirty five percent back then nineteen eighty two.
It's one hundred percent today. The deficits say, the biggest peacetime deficit we ever ran. Deficits by their nature are inflationary, and you know, one point we have to deal with this. I mean, I would beg the government to set a powerful Simpson Balls type committee authrighted by the Congress up or down vote. It's probably the only way to do it. The other way to do is wait so it's some kind of disaster in the market, and then you're kind of forced to do it at the wrong time. And
I don't know when that might be. I will have next year, probably not, But you know, in America four one hundred and twenty percent to GDP probably, which we wait for that hockey stick to start. I don't think so. I think it's just a bad way to run risk.
So you mentioned government Libby Cantrell at pempcos she runs public policy over there. Every time she comes on, she tells us that when she talks to clients overseas, she has to tell them no, Jamie Diamond still isn't running for president?
You get that question so much? Does it annoy you or does it flatter you? It's more annoying than that because I can't run for president, you know, and there was no opening. I mean there's no way that it was even possible. So it's a little flattering. But you know, I just want to help our government do the right stuff. I think there are a lot of things to do
to make America far better off. And particularly because I've mentioned as many times, a lot of things we've done which I think are ad whether you're a Democrat or Republican and be is supported there has often done the name of good have hurt the lower twenty percent. They're dying younger, their income didn't go up for twenty years. They're the ones who have more crime in neighborhoods, Their schools don't work. You know, we should we should acknowledge
that as citizens to do something about it. Like I said, a lot of you know, policies put in place have the exact unintended consequence, and that's where they hurt, like for example, growing the economy, well the people who helped the most at the lower end. And I think we have to be very clear headed about how we can accomplish what we want to accomplish to lift up all of America.
You have an endorsement candidate, and I wonder why is it because you think as the leader of a big company you've got to work with anyone, or is this just that you can't decide.
This particular time around. I will decide, okay, and I will vote. I reserve the right to do whatever I want. Okay. I'm a citizen. I can vote, I can say what I want. And as to that, I've never been in the private endorsing candidates, you know, and so but I I'm thinking through what I want to say or do or something like that.
In a recent uh Washington Post editorial that you wrote you talked about how you think it would be important for the next president to have a private sector uh individual at the cabinet level to really advise Yeah, half, yeah, Okay, which positions do you think should be?
I mean, I look, I look at the government. You know, we need the American public needs and deserves very competent, effective government. And if you go around, they don't believe that's what they have. And you know, so people of all these things that government should do, but a lot of the things the government does, it doesn't do particularly well. It does some things particularly well. It does a lot
of things only the government can do. But we we have to be again cold blooded, clear headed, pragmatic about what works doesn't work, and over time they'd be less or less people in government who were in the real world. You may think whatever you want about you know, I'm not blaming economists or e. C. Y or or teachers or stuff like or lifetime politicians. That's not the same thing. And and you know it's that's there are lessons in
the real world. Even FDR when he's getting closer and closer to the World War two and needed to start building tanks and bridges, he took the people he'd been explorating for years, the heads of gm GE DuPont, and got them back. I need you to set up these production boards and grow, you know, do these things. So it's about growing the economy. It's not about putting business people there. And also I think we should insult each
other as citizens, try to understand each other. And I think it'd be great the next president they really want to that word, they say, unify, put you know, put it someone from the other part of your cabinet, you know, which, by the way, is what Eisenhower did. And that whole op ed kind of came out of Eisenhower. He got the right people there, They studied the issues, they got the policy right. He never blamed people, he never insulted people. He never you know, he was always civil and which
I think is a better way to be. Didn't denigrate the country, didn't denigrate classes of people. And so I just think it's a better way to be. And there's some more unifying leadership than you know, yelling discream at each other.
If someone theoretically were called upon as a business leader, would you suggest that they go?
It's up to them, you know, I'm wouldn't suggest they go and not go. You know, it's their life and how these things contribute to stuff like that.
So a major focus for you in your recent letter to investors and just interview suspen GEO politics and the situation is pretty dire, and I wonder if what you're telling clients, what they're doing, how they're arranging in preparation for potential escalations, and a whole bunch of different not spots, you know.
Unfortunately, you know, I got a lot of things and people like you tell us the positive news. What's the good spin out there? I was getting to me. I don't do anything like that. You know. The truth is the truth is the truth, and the truth stays pretty ugly. And you know, we have these war now. You know, almost a million the casualties in Ukraine. The Ukrainians say that twenty thousand children have been kidnapped and sent to Russia.
It's quite clear that Russia I ran North Korea acting in cahoots, but China isn't kind of part of that when they're aiding the bedding Russia. You know, China and Russia spoken about dismantling the world order set up by America the Allies the after World War Two, which have been quite successful in keeping peace. You know, they want to do it differently, and that's their right. I don't
think it's a good idea for the Western world. And this and of course the terrorist accident of Israel, Israel's being attacked, you know, basically on three or four sides. You know, this is tough stuff. American warships are being attacked every day in the Red Sea. You know. The head of the FBI just said the terrorist threats internally and externally to the United States have never been higher. I think there was a lesson on when Ukraine was evaded.
The world isn't a safe place. We've got to get rid of the illusion that's safe and somehow pieces at hand. So we need a very strong military, which means we have to spend more money at least every analysis I received for that. We need a very strong economy. We have to subordinate some of the stuff we do to national security, you know, and we have to engage much better to allies and trade, finance, development for answer things
like that. If you want to hold the world together, and so yeah, I think this is the most important thing for dwarfs when we have a soft landing or modest landing the next twelve months. That to me is a business person. Almost all of us in business dealt with that many times. That is not a big deal.
I guess how do you then advise a potential client about what national security is? You know, is it a car, is it a I mean basically, how do you prepare for the changing world.
That we live in. Yeah, so this is a very important question. So first of all, in terms of managing risk, when you look at the potential outcomes, I mean all business should look at a range of outcomes and try to be prepared for whether or not they think that to happen, you know. And then you know, could war affect the global commany Absolutely, it can cause inflation and no growth. It can cause it may have no effect,
but you got to be prepared for those things. And then on strategy specifically, we've actually hired Paul Henley, a former US Army national intelligence guy, forming a group working with our research people, internal people, what to answer exactly those questions, you know, what is national security? You know, Jake Salvyn talks about the small garden with high fences, what's in the garden, what's related to the garden? How would you do that? A lot of companies still look
at their own supply chains. They would say, no, I get these components from Mexico or Vietnam. But inside that component is a is a very important one from China. So it's gonna take a while. But every country, if it's national security, has the right to say this are gonna do to protect our national security, and so we need work to do. And then then the related you know, I call it merket So's behavior. People are getting upset at China about EV's and and and lithium and solars.
If it's unfair competition, that's a different issue, but it also needs to be addressed.
Jamie Diamond unfortunately right at the time. And it's been a pleasure to speaking with you.
Thank you for taking the time with us. And now I'm gonna throw it back to you, all right. Lisa brom Wins there speaking exclusively with Jamie Dimond. This is Bloomberg