Jamie Dimon, CEO of The U.S. Largest Bank, J.P. Morgan, Just Released His Annual Shareholder Letter
When Dimon speaks, the world listens.
Here are key takeaways from his annual letter: U.S. Economy:
"In spite of the unsettling landscape, including last year’s regional bank turmoil, the U.S. economy continues to be resilient, with consumers still spending, and the markets currently expect a soft landing. It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus"
Soft-Landing: "Equity values, by most measures, are at the high end of the valuation range, and credit spreads are extremely tight. These markets seem to be pricing in at a 70% to 80% chance of a soft landing — modest growth along with declining inflation and interest rates. I believe the odds are a lot lower than that."
AI: "We are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet, among others." "Over time, we anticipate that our use of AI has the potential to augment virtually every job"
Inflation & Rates: "Huge fiscal spending, the trillions needed each year for the green economy, the remilitarization of the world, and the restructuring of global trade — all are inflationary... This may lead to stickier inflation and higher rates than markets expect." "We are prepared for a very broad range of interest rates, from 2% to 8% or even more"
Private Credit: "Many people in the private credit arena are very smart and creative and want to help the companies they invest in navigate through market shoals. They can move quickly, discreetly and flexibly... On the other hand, not all players are that good. And problems in the private credit market caused by the bad players can leak onto the good ones, even though private credit money is locked up for years. If investors feel mistreated, they will cry foul, and the government will respond by putting a laser focus on the business."
QT: "Quantitative tightening is draining more than $900 billion in liquidity from the system annually — and we have never truly experienced the full effect of quantitative tightening on this scale." "...the unknown effects of quantitative tightening (which I am more worried about than most)"
Geopolitical Risks: "America’s global leadership role is being challenged outside by other nations and inside by our polarized electorate.We need to find ways to put aside our differences and work in partnership with other Western nations in the name of democracy." "Recent events, however, may very well be creating risks that could eclipse anything since World War II — we should not take them lightly."