The AI trade is only just beginning, says Newton's John Porter
John Porter, Newton Investment Management chief investment officer, joins 'The Exchange' to discuss JPMorgan CEO Jamie Dimon's comments on fixed income and the 'Mag 7's run.
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Newsweek
2 hours ago
- Newsweek
JPMorgan CEO Says US Economy Threatened by 'Enemy Within'
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The CEO of JPMorgan Chase Jamie Dimon has characterized the real threats to the long-term health of the U.S. economy as internal, rather than those posed by any foreign nation. Speaking at the Reagan National Economic Forum in California on Friday, Dimon said that the "tectonic plates" of geopolitics and the global economy were shifting, and that the biggest issue underlying this was "the enemy within." "I'm not as worried about China. China is a potential adversary—they're doing a lot of things well, they have a lot of problems," he said. "But what I really worry about is us. Can we get our own act together—our own values, our own capability, our own management." Why It Matters Dimon's comments come as the U.S. grapples with the threat of a recession, and a broader deterioration of its economic outlook. In addition to weak consumer confidence and fears over inflation, the trade policies of the U.S. administration have resulted in significant market volatility and raised concerns the economy could be approaching a major downturn. Despite the 90-day tariff pause agreed between the two nations on May 12, negotiations between the two countries have not resulted in substantive progress, with recent accusations of violations further and aggressive posturing from the administration threatening to derail any potential breakthrough. What To Know Dimon defined the "enemy from within" as a broad combination of state-level economic mismanagement, regulatory gridlock, deficiencies in the schooling and health care systems, while mentioning several other difficulties, including the persistent risk of the U.S. economy slipping into a recession. While he agreed with outgoing Berkshire Hathaway CEO Warren Buffet's assessment that the U.S. and its economy remain "resilient," Dimon added: "This time is different. This time we have to get our act together and we have to do it very quickly." JPMorgan Chase CEO Jamie Dimon delivers a speech during the Global Markets Conference, ahead of the Choose France summit, in Paris, on May 15, 2025. JPMorgan Chase CEO Jamie Dimon delivers a speech during the Global Markets Conference, ahead of the Choose France summit, in Paris, on May 15, 2025. Michel Euler/POOL/AFP via Getty Images In addition to geopolitics, and the proxy activity and nuclear proliferation of countries such as North Korea, he said another "tectonic shift" taking place was in the global economy, and America's continued ability to engage and maintain amicable economic relations with its trading partners. He said that the priority over the coming weeks and months—during the pause on reciprocal tariffs and the temporary reduction in China's rates—should be to reach in-principle agreements with "15 important" partners, without specifying the nations in question. "I would engage with China," he added. "I just got back from China last week. They're not scared, folks. This notion they're gonna come bow to America — I wouldn't count on that." Despite the truce agreed last month, negotiations between the world's two largest economies are "a bit stalled," according to Treasury Secretary Scott Bessent. In addition, President Trump on Friday accused Beijing of "totally" violating the terms of the 90-day pause, signaling a potential reescalation of the trade conflict. What People Are Saying JPMorgan CEO Jamie Dimon on Friday said: "Right now we're not a team anymore, and we don't collaborate, we don't talk that much to each other. Deal with our policy—and this is the enemy within—we've got to fix our permitting, our regulations, our immigration, our taxation." "But the most important is maintain those military alliances. Spend whatever you've got to spend to have the strongest military in the world," he added. "And I'm hoping the goal of the Trump administration is this: Keep the Western military alliances together." President Trump, via Truth Social on Friday, said: "Because of this deal, everything quickly stabilized and China got back to business as usual. Everybody was happy! That is the good news!!! The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!" What Happens Next? Trump's 90-day suspension of reciprocal tariffs is set to expire on July 8, while the China tariff pause will end in August—though both remain subject to a potential cancellation.
Yahoo
3 hours ago
- Yahoo
Is the Housing Bubble Finally Losing Pressure?
The past few years have been a whirlwind for homebuyers, from a pandemic-driven housing boom to inflation-induced interest rate hikes that made borrowing increasingly expensive. As it stands today, many people looking for an abode are getting clobbered by a one-two punch: arm-and-a-leg home prices and stubbornly elevated mortgage rates. That means, for many Americans, going to open houses is basically worth it only for the complimentary canapés, a consolation snack while they restrain their homeownership ambitions until better market conditions arise (fingers crossed). The spring season, typically the housing market's busiest, hasn't provided much cause for optimism: Existing home sales fell 0.5% in April from March, according to the National Association of Realtors. Home sales for each month fell to their weakest since 2009, when the Great Recession was in full swing following the subprime mortgage crisis. In February, JPMorgan analysts were muted about the US housing market's prospects, writing it was 'likely to remain largely frozen through 2025.' But a notable new report last week from Redfin argued that some air may be let out of the bubble soon, much to the advantage of prospective buyers. The big reason, according to the brokerage's analysis: Sellers now outnumber buyers by nearly half a million, the biggest gap on record since 2013. So, could the most favorable ratio for buyers in over a decade give them enough leverage to close deals and even bring prices down? Let's take a look (and, if not, there'll always be the canapés). READ ALSO: Shrinking GDP Shows Tariffs' Impact as Courts Scrutinize Their Legality and E.l.f. Soars After $1 Billion Pow(d)er Move to buy Hailey Bieber's Rhode First, a quick catchup on the forces that brought us to this place. During the pandemic, housing demand went through the roof. As Federal Reserve Bank of San Francisco researchers explained, that was thanks mainly to the massive shift to remote work, a 'key factor explaining why U.S. house prices grew 24% between November 2019 and November 2021.' San Francisco Bay-area tech workers could suddenly take their high incomes and buy homes in cheaper (for them; sorry, locals) Austin, Texas, or Denver, Colorado. Wall Street professionals could do the same in Miami or Tampa Bay, Florida. By 2022, Federal Reserve Board economists estimated that 'new construction would have had to increase by roughly 300% to absorb the pandemic-era surge in demand.' Instead, the mushrooming demand prompted the housing market to overheat. In November 2021, for example, there were 2.3 million prospective homebuyers versus 1.4 million sellers, giving the latter a significant market advantage. In April, five years after pandemic lockdowns, the median US existing home price hit $414,000, a new peak for that month, according to the National Association of Realtors, which noted home prices have risen on a year-over-year basis for 22 straight months. In addition to increasingly expensive homes, another challenge for buyers emerged in 2022, when the Federal Reserve began hiking interest rates to curb the highest inflation surge in decades. That was back when we were fretting about supply-chain snarls caused by the pandemic (now we fret about supply-chain snarls due to tariff wars). Mortgage rates, which tend to track interest rates, had been incredibly favorable when the Fed cut interest rates to record lows to stimulate the economy at the onset of the pandemic. They spiked after the Fed kicked off a series of rate hikes in early 2022, however. These factors helped bring the pandemic housing boom to a halt: Those 2.3 million buyers in November 2021 declined all the way to 1.5 million by November 2022. Now, the number of sellers far outstrips the number of buyers. Redfin's new analysis found that there are an estimated 490,041 more home-sellers in the US than prospective buyers, a sharp reversal from the pandemic housing boom. 'The balance of power in the US housing market has shifted toward buyers, but a lot of sellers have yet to see or accept the writing on the wall,' Asad Khan, the brokerage's chief economist, says in the report. 'Many are still holding out hope that their home is the exception and will fetch top dollar. But as sellers see their homes sit longer on the market and notice fewer buyers coming through on tour, more of them will realize that the market has adjusted and reset their expectations accordingly.' Fretting about tariffs has helped suppress the number of Americans shopping for a home, with a survey finding just under a quarter of them canceled plans to make major purchases because of Washington's trade-warring and another third delayed plans. That means less competition for the buyers in the field. Meanwhile, Redfin predicts that home prices will fall 1% year over year by the end of 2025, with the glut of sellers forming the bedrock of its reasoning. Unsurprisingly, many of the markets where the balance of power has shifted the most for homebuyers, according to the report, are the same places where the pandemic housing boom occurred. Of the 50 most populous metro areas in the US, the top buyer's market is now Miami, according to Redfin. Where it once was flooded with homebuyers attracted to the idea of warm weather and beaches enhancing a work-from-home lifestyle, it now has roughly 21,000 sellers compared with just 7,000 buyers, or a 197% difference. Another notable metro area is Austin, which drew an influx of tech workers during the pandemic. It has a 124% ratio of sellers to buyers and even saw its median home sale price fall 3% year-over-year in April. Jacksonville and Tampa, both in Florida, as well as Phoenix, Arizona, also experienced year-over-year declines in median home sale prices. 'It's not uncommon for a buyer to get a home for 5% less than the list price and $10,000 in seller concessions,' one Daytona Beach, Florida-based Redfin realtor noted in the firm's report. Highly Rated. Even if the balance of power has shifted, one factor dogging buyers remains stubbornly unfazed: mortgage rates. Forecasts had initially predicted they would fall this year, based on expectations that the Federal Reserve would cut the benchmark interest rates undergirding a wide swath of lending costs as inflation softened. That hope has been repeatedly dashed due to the economic uncertainty accompanying the Trump administration's shifting economic policies. Until the Fed is certain conditions warrant a rate cut, higher interest rates will continue propping up mortgage costs. Another benchmark for mortgage rates, Treasury yields, has simultaneously been driven up because the US credit rating was downgraded over concerns about the country's swelling budget deficit. The 30-year fixed mortgage rate as of May 29 was 6.89%, according to the Federal Reserve Bank of St. Louis. Since 2023, mortgage rates have hovered well above 6%, often closer to 7%, at roughly the highest levels in two decades. Redfin expects them to stay there through the rest of the year, predicting mortgage rates will float around 6.8%. So, while lower housing prices have arrived in some markets and may be on the way in others where buying power has shifted, mortgage rates are likely to remain a relative thorn in the side of buyers due to economic factors far beyond their control. If tariffs are levied on imported goods at the scale the Trump administration has threatened, that may spur more inflation and make it even harder for the Fed to cut rates. Unfortunately, while real estate agents might be able to get you 5% off the list price for your dream house, they can't negotiate away the nascent global trade war and Congress' bipartisan habit of spending beyond its means. This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter.
Miami Herald
6 hours ago
- Miami Herald
JPMorgan CEO Jamie Dimon backs surprising tax change
Certain political truths have stood the test of time. Republicans' love for tax cuts has been one of those political truths. Modern Republican presidents are responsible for the most significant cuts in history. President Ronald Reagan signed into law the Economic Recovery Act of 1981, which lowered the highest individual tax rate from 70% to 50% and the lowest to 11% from 14%, along with the Tax Reform Act of 1986, which lowered the highest capital gains tax rate from 28% to 20%. Related: Jamie Dimon sends stark warning on the economy President George W. Bush enacted the 2001 and 2003 tax cuts that gave the top 1% of households an average tax cut of over $570,000 between 2004 and 2012, increasing their after-tax income by more than 5% each of those years. President Donald Trump continued that legacy wth the 2017 Tax Cuts and Jobs Act, which lowered the top marginal tax rate from 39.6% to 37% and increased the standard deductions for single and married filers, among other changes. Those provisions are scheduled to expire in December, but the Republican-controlled Senate and House of Representatives are working on legislation making them permanent. JP Morgan (JPM) 's CEO has been smart enough to describe himself as politically agnostic, calling himself "barely a Democrat" and telling CNBC, "My heart is Democratic but my brain is kind of Republican." New comments from Dimon at the Reagan National Economic Forum make it seem that Dimon's brain is also moving over to the Democratic side. Image source:On Friday, Jamie Dimon told the mostly Republican crowd in Washington, D.C., that he supports taxing carried interest, the compensation paid to private investment fund managers. This compensation is taxed at a much lower rate than regular income, giving a significant tax benefit for the lucky few Americans who qualify. According to Reuters, Dimon said, "We absolutely should be taxing carried interest," echoing President Donald Trump's sentiment. Related: Elon Musk has surprising message on Big Beautiful Bill income tax cuts This change, which has received bipartisan support over the years but never came to pass, would severely hurt the bottom line for hedge funds, private equity firms, and similar financial institutions. Even in 2015, Trump said, "The hedge fund guys are getting away with murder," but nothing changed during his presidency. It's estimated that the government loses about $20 billion in annual tax revenue from the rule. Dimon and Trump's stance on this tax loophole may indicate that the country's finances are reaching their tipping point. Despite Moody's recent unprecedented credit downgrade, the White House's latest budget proposal is expected to explode the deficit. More economy American car company takes drastic action in response to tariffsTariff repeal couldn't come at a better time for US businesses Wall Street's TACO trade gains momentum and stock market rally The bill includes a slate of tax cuts, including increases to the Social Security income tax deduction and breaks for tips and overtime, as well as a revamped State and Local Tax (SALT) deduction. According to the Tax Foundation, the bill would increase the country's 10-year budget deficit by $2.6 trillion while reducing federal tax revenue by $4.1 trillion. In essence, it increases spending while taking in less income than the government already does. But the $20 billion from closing the tax loopholes is better than nothing. Related: DOGE cuts are already saving Elon Musk billions The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
