Latest news with #JamieDimon
Daily Mail
a day ago
- Business
- Daily Mail
America's top banker reveals Wall Street's hottest new trend that could spell financial doom - as he goes all in
America's top banker is pouring $50billion into a private lending phenomenon taking Wall Street by storm, despite acute concerns it could spark a market meltdown. JPMorgan Chase chief executive Jamie Dimon is spearheading a pivot for his institution, even as he voices fears about the boom in unregulated, private lending. Speaking to clients in Miami in February, Dimon compared the practice to the subprime mortgage fad which sparked the 2008 global financial crisis and laid waste to millions of American's livelihoods and sparked tough regulations in banking. Citing the mistakes bankers made which led to 'everything' blowing up in 2008, Dimon, who is considered the most successful banker in generations, said: 'Parts of direct lending are good, but not everyone does a great job. 'That's what causes problems with financial products.' Banks issued high-risk home loans to borrowers with poor credit histories, and when the initial low interest rates finally spiked, borrowers found themselves unable to pay their mortgages, triggering the collapse of the US housing market. These loans sparked a global credit crisis which ravaged the economy, wiping out trillions of dollars of household wealth and driving unemployment to record highs. Dimon warned the private lending trend - now worth a whopping $700billion - is a similar craze and there 'could be hell to pay' if the market ultimately falters. These loans are generally so risky that traditional banks would not approve, but highly indebted companies are seeking them out from privatized financial firms, the Wall Street Journal reported. They took hold in 2015, as private equity giants with money to spare from successful pension funds sought higher returns and began dabbling in corporate lending. Suddenly, businesses had the means to circumvent the big banks tough regulations, promised loans without the need to secure a credit rating and with more flexible terms. They could borrow more than banks would traditionally lend, and in exchange would have a higher interest rate, with payments tacked on to the back of the loan. According to the Federal Reserve's data from 2024, companies that went down the private loan route paid between two to three percent more than with traditional banks. Defaults have historically remained low, but economists fear this could change swiftly in a sustained recession or market downturn. As early as 2021, Dimon was warning shareholders that the entire scheme ' looked like a bubble' and would need to be 'assiduously monitored.' But he was also looking for the safest way to tap into the market. On the same day Dimon raised the alarm with clients about the risks, JPMorgan released a statement confirming it was increasing its 'direct lending commitment to $50 billion.' 'This strategic move is designed to extend the firm's direct lending capabilities and provide tailored private credit solutions to meet the evolving needs of clients,' the firm said. Under the new plan, corporate clients have the option to either take on a traditional loan or a private lending option, which could grant them access to more cash but see them saddled with a higher interest rate. 'Since 2021, J.P. Morgan has successfully deployed over $10 billion across more than 100 private credit transactions, serving both corporate and sponsor clients,' JPMorgan said in a February statement. 'This latest commitment underscores the bank's dedication to being a leader in both the broadly syndicated and private credit markets.' JPMorgan holds onto private loans and collects interest until it matures. Dimon has considered the risk and sees a path forward for JPMorgan to profit even if a crisis destroys the market. During the global financial crisis, a handful of bankers who predicted the crash were able to hugely profit by by betting against the very mortgage investments they sold to clients, making money as those investments ultimately collapsed. The crash happened when millions of Americans began to default on risky home loans, causing the value of those investments to plummet and triggering panic across the global financial system. Glenn Schorr, a senior analyst for Evercore, said: 'As a bank, you can only watch private credit come from nowhere and get to a trillion dollar industry for so long. 'This is what its clients are asking for.'
CNBC
a day ago
- Business
- CNBC
CNBC Daily Open: Surprise tariff salvo on Saturday
No one likes working over the weekend. Unless you are the leader of the free world firing off social media posts — that is, after all, what counts as work for many politicians nowadays —announcing barriers to the free movement of goods. It's anyone's guess why U.S. President Donald Trump posted tariff letters to the European Union and Mexico — a steep 30% on goods imported from both — on Saturday. The first batch of letters was released Monday, and the second Wednesday. Going by that cadence, the latest letters should have been sent Friday. Nope. Here are two completely speculative conjectures: Perhaps Trump wanted to save off his most devastating salvos — the EU and Mexico were, in 2024, the top-two largest trade partners of the U.S. — for when the markets were closed, hence avoiding any immediate backlash from traders. But that seems unlikely, given that Trump told NBC News on Thursday that he thinks "the tariffs have been very well-received" because "the stock market hit a new high" then. And, as JPMorgan Chase CEO Jamie Dimon pointed out on the same day, there is "complacency in the markets" because investors are a "little desensitized" to tariff news. Perhaps Trump just wanted to annoy his counterparts, especially those on the continent. Working on a weekend might be exasperating to an American, but it's basically sacrilegious for Europeans. The combination of unexpectedly high tariffs — comments last week from Trump and U.S. Commerce Secretary Howard Lutnick gave the impression a favorable deal was in the books — and violating the right to disconnect would be sure to rile up Ursula von der Leyen, president of the European Commission, and her ilk. Perhaps there's no point in trying to make sense of the announcements' timing, let alone the tariffs. The only thing that's certain is that, for many, there was no dancing on a Saturday night. The U.S. imposes 30% tariffs on the EU and Mexico. Trump on Saturday revealed those tariffs in letters posted on Truth Social. The EU suspended its retaliatory tariffs, which were scheduled to take effect Monday, in hopes of reaching a deal. U.S. stock futures slip Sunday evening stateside. Last week, all three major U.S. indexes fell on a weekly basis as investors braced themselves for more tariff announcements — which indeed came over the weekend. The Stoxx Europe 600 fell 1.01% Friday. Trump can 'certainly' fire Powell. Those comments were made by National Economic Council Director Kevin Hassett on Sunday stateside, who said that "if there's cause," Trump can remove Jerome Powell from his position as Federal Reserve chair. 'You're losing,' Jamie Dimon tells Europe. On Thursday, JPMorgan's CEO said at Ireland's Department of Foreign Affairs that "Europe has gone from 90% U.S. GDP to 65% over 10 or 15 years. That's not good." [PRO] Earnings season kicks off. Investors will want to keep an eye on second-quarter financial statements from big banks, such as JPMorgan and Goldman Sachs, this week. But more important is their outlook on the second half of the year. U.S. tariffs take center stage but China and the EU are quietly clashing In recent weeks, European Union restrictions on Chinese companies taking part in public tenders for medical devices were quickly met with China imposing import curbs on such products. Separately, long-threatened Chinese duties on brandy from the EU came into force earlier this month, and both Beijing and Brussels have ramped up criticism of each another. Altogether, EU-China trade relations are now "quite poor," according to Marc Julienne, director of the Center of Asian Studies at the French Institute of International Relations. —
Yahoo
2 days ago
- Business
- Yahoo
Market Resilience Challenged by Trump's Weekend Tariff Salvo
(Bloomberg) -- Financial markets, which have shown increasing insensitivity to tariff threats from the US, will face a test at the Monday open after President Donald Trump declared a 30% rate for the European Union and Mexico effective Aug. 1. Singer Akon's Failed Futuristic City in Senegal Ends Up a $1 Billion Resort Why Did Cars Get So Hard to See Out Of? How German Cities Are Rethinking Women's Safety — With Taxis Philadelphia Reaches Pact With Workers to End Garbage Strike Trump has ratcheted up trade measures, promising that more tariffs are coming to everyone from Canada to Brazil to Algeria and inviting trading partners to negotiate further. Despite warnings of complacency from the likes of JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, investors have so far behaved as if they're counting on the US president to back down, having seen previous U-turns from his administration. 'Investors shouldn't bank on Trump only bluffing with the 30% tariff threat on EU goods,' Brian Jacobsen, chief economist at Annex Wealth Management, wrote in an email. 'That level of tariffs is punitive, but it likely hurts them more than the US, so the clock is ticking.' Having set a record high in recent days, Bitcoin, which trades through the weekend, was little moved after the latest Trump missives. Currency markets will give earlier indications of the impact on global risk appetite when they resume trading at 5 a.m. Sydney time. The euro touched its strongest level against the dollar since 2021 this month as investors assessed the region's relative growth prospects. Meanwhile, the Mexican peso set a one-year high of 18.5525 versus the dollar on July 9. President Trump and his allies' criticism of Jerome Powell's handling of the expensive renovation of the Fed's headquarters — with some administration officials building a case to remove Powell from the Fed's Board of Governors — may also weigh on markets at the start of the week. Deutsche Bank AG strategist George Saravelos said the potential dismissal of Powell is a major and underpriced risk that could trigger a selloff in the US dollar and Treasuries. 'If Trump were to force Powell out, the subsequent 24 hours would probably see a drop of at least 3% to 4% in the trade-weighted dollar, as well as a 30 to 40 basis point fixed-income selloff, Saravelos said. The greenback and bonds would carry a 'persistent' risk premium, he said in a note, adding that investors may also grow anxious about the potential politicization of the Fed's swap lines with other central banks. Tariff Campaign Financial markets have been struggling with how to price in the on-again, off-again tariff campaign instigated by Trump so far in his second term. While markets responded to the April 2 'Liberation Day' announcements by selling risk assets and even US Treasuries, those moves have now almost all reversed as the president delayed many of his threatened levies. The EU had been trying to conclude a tentative deal with the US to stave off higher tariffs, but Trump's letter punctured the recent optimism in Brussels. The US president did, however, leave an opening for additional adjustments. 'As usual, there are many conditions and clauses that can get these rates reduced,' Jacobsen wrote. 'That's probably why the market might not like the tariff talk, but it's not panicking about it either.' Even when Trump said that Aug. 1 would be a hard deadline, markets reacted as if that date was still negotiable. They did show some signs of caution Friday, when stocks fell from all-time highs as Trump intensified his trade offensive, and the dollar rallied for its best week since February. 'The market isn't believing Trump, so we may see pressure on the exchange rate, but only temporarily,' said Gabriela Siller, director of economic analysis at Grupo Financiero Base. 'Unless the tariff actually goes into effect and is collected, because according to US trade data, the IEEPA tariffs aren't being collected to the letter.' In his letter to Mexican President Claudia Sheinbaum, Trump said the country has been 'helping me secure the border,' but added that it wasn't enough. The US doesn't intend to apply the 30% rate to USMCA-compliant goods, according to a White House official. --With assistance from Kelsey Butler. (Adds comments on the Mexico peso, Trump pressure on Fed Chair starting in the sixth paragraph) 'Our Goal Is to Get Their Money': Inside a Firm Charged With Scamming Writers for Millions Trump's Cuts Are Making Federal Data Disappear Soccer Players Are Being Seriously Overworked Will Trade War Make South India the Next Manufacturing Hub? Trade War? No Problem—If You Run a Trade School ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Market Resilience Challenged by Trump's Weekend Tariff Salvo
(Bloomberg) -- Financial markets, which have shown increasing insensitivity to tariff threats from the US, will face a test at the Monday open after President Donald Trump declared a 30% rate for the European Union and Mexico effective Aug. 1. Singer Akon's Failed Futuristic City in Senegal Ends Up a $1 Billion Resort Why Did Cars Get So Hard to See Out Of? How German Cities Are Rethinking Women's Safety — With Taxis Philadelphia Reaches Pact With Workers to End Garbage Strike Trump has ratcheted up trade measures, promising that more tariffs are coming to everyone from Canada to Brazil to Algeria and inviting trading partners to negotiate further. Despite warnings of complacency from the likes of JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, investors have so far behaved as if they're counting on the US president to back down, having seen previous U-turns from his administration. 'Investors shouldn't bank on Trump only bluffing with the 30% tariff threat on EU goods,' Brian Jacobsen, chief economist at Annex Wealth Management, wrote in an email. 'That level of tariffs is punitive, but it likely hurts them more than the US, so the clock is ticking.' Having set a record high in recent days, Bitcoin, which trades through the weekend, was little moved after the latest Trump missives. Currency markets will give earlier indications of the impact on global risk appetite when they resume trading at 5 a.m. Sydney time. The euro touched its strongest level against the dollar since 2021 this month as investors assessed the region's relative growth prospects. Meanwhile, the Mexican peso set a one-year high of 18.5525 versus the dollar on July 9. President Trump and his allies' criticism of Jerome Powell's handling of the expensive renovation of the Fed's headquarters — with some administration officials building a case to remove Powell from the Fed's Board of Governors — may also weigh on markets at the start of the week. Deutsche Bank AG strategist George Saravelos said the potential dismissal of Powell is a major and underpriced risk that could trigger a selloff in the US dollar and Treasuries. 'If Trump were to force Powell out, the subsequent 24 hours would probably see a drop of at least 3% to 4% in the trade-weighted dollar, as well as a 30 to 40 basis point fixed-income selloff, Saravelos said. The greenback and bonds would carry a 'persistent' risk premium, he said in a note, adding that investors may also grow anxious about the potential politicization of the Fed's swap lines with other central banks. Tariff Campaign Financial markets have been struggling with how to price in the on-again, off-again tariff campaign instigated by Trump so far in his second term. While markets responded to the April 2 'Liberation Day' announcements by selling risk assets and even US Treasuries, those moves have now almost all reversed as the president delayed many of his threatened levies. The EU had been trying to conclude a tentative deal with the US to stave off higher tariffs, but Trump's letter punctured the recent optimism in Brussels. The US president did, however, leave an opening for additional adjustments. 'As usual, there are many conditions and clauses that can get these rates reduced,' Jacobsen wrote. 'That's probably why the market might not like the tariff talk, but it's not panicking about it either.' Even when Trump said that Aug. 1 would be a hard deadline, markets reacted as if that date was still negotiable. They did show some signs of caution Friday, when stocks fell from all-time highs as Trump intensified his trade offensive, and the dollar rallied for its best week since February. 'The market isn't believing Trump, so we may see pressure on the exchange rate, but only temporarily,' said Gabriela Siller, director of economic analysis at Grupo Financiero Base. 'Unless the tariff actually goes into effect and is collected, because according to US trade data, the IEEPA tariffs aren't being collected to the letter.' In his letter to Mexican President Claudia Sheinbaum, Trump said the country has been 'helping me secure the border,' but added that it wasn't enough. The US doesn't intend to apply the 30% rate to USMCA-compliant goods, according to a White House official. --With assistance from Kelsey Butler. (Adds comments on the Mexico peso, Trump pressure on Fed Chair starting in the sixth paragraph) 'Our Goal Is to Get Their Money': Inside a Firm Charged With Scamming Writers for Millions Trump's Cuts Are Making Federal Data Disappear Soccer Players Are Being Seriously Overworked Will Trade War Make South India the Next Manufacturing Hub? Trade War? No Problem—If You Run a Trade School ©2025 Bloomberg L.P.
CNBC
2 days ago
- Business
- CNBC
Earnings playbook: The reporting season kicks off with big banks and Netflix on deck
It's that time again. The second-quarter earnings season kicks off this week with 37 companies that are members of the S & P 500 index set to report. Among the most notable companies outlining how they performed in the quarter ended June 30: big banks, led by JPMorgan Chase , the largest in the land, and streaming giant Netflix. Expectations heading into the season are muted as companies navigate an ever-changing tariff landscape. According to FactSet, second-quarter S & P 500 earnings are expected to have grown 4.8% from the same period a year ago. If that's the case, it would end with the lowest quarterly growth rate since the fourth quarter of 2023. Take a look at CNBC Pro's breakdown of what to expect in this week's key reports. All times are ET. Tuesday JPMorgan Chase is set to report earnings before the bell, followed by a conference call at 8:30 a.m. Last quarter: JPM reported better-than-expected earnings and revenue, but CEO Jamie Dimon warned of " considerable turbulence " ahead. This quarter: Analysts polled by LSEG expect a sharp year-over-year decrease in earnings. What to watch: Bank of America analyst Ebrahim Poonawala sees solid results coming at JPMorgan Chase. But Federal Reserve rate cuts could dampen the outlook for the company, he said, adding that, "While mgmt. is unlikely to provide guidance for 2026 just yet, commentary from investor day + recent industry conferences suggest a sharpened focus on expenses." What history shows: JPMorgan earnings have beaten estimates in the last five quarters, according to Bespoke Investment Group. Wells Fargo is set to report earnings premarket, with a call slated for 10 a.m. Last quarter: WFC shares fell on lower-than-expected revenue and a decline net interest income . This quarter: Revenue is forecast to have remained flat year over year, according to LSEG. What to watch: David Long of Raymond James downgraded Wells Fargo last week to market perform from outperform, noting the market has priced in stronger future earnings now that an asset cap on the bank has been removed. Still, he raised his second-quarter earnings estimate. What history shows: Wells Fargo has posted an earnings beat in eight of the last nine quarters, according to Bespoke. Citigroup is set to report earnings before the stock market opens. A call with analysts is set for 11 a.m. Last quarter: C results beat expectations thanks to strong fixed income and trading revenue . This quarter: Analysts polled by LSEG expect earnings to have increased by about 5% year over year. What to watch: Wells Fargo bank analyst Mike Mayo lowered his second-quarter estimates for Citigroup, "largely reflecting higher 2Q expenses and provisions than previously est., partially offset by decent capital markets." To be sure, Citigroup shares have outperformed those of other major banks, up more than 23% so far this year. What history shows: Bespoke data shows Citigroup beats Wall Street analysts' earnings estimates 78% of the time. Wednesday Bank of America is set to report earnings in the premarket, followed by a call at 8 a.m. Last quarter: Strong net interest income and trading revenue led BAC results to top expectations. This quarter: Earnings and revenue are expected to have grown by less than 5% year over year, according to LSEG. What to watch: Bank of America shares have underperformed other major banks this year, up 6.3% in 2025. " Investors lean bullish given YTD underperformance vs. peers, but expense growth and [near term net interest income] are debate points," wrote Piper Sandler analyst R. Scott Siefers. "We have noted some concern among investors that N-T NII could be a little weaker than hoped, though our best guess is that management will stick to the FY25E guide here (i.e. +6% to 7% in 2025E and a 4Q25E NII of ~ $15.5B to $15.7B)." What history shows: Bank of America tops earnings expectations 80% of the time, but the stock averages a loss of 0.7% on earnings days, according to Bespoke. Johnson & Johnson is set to report earnings before the market's opening bell, with a conference call scheduled for 8:30 a.m. Last quarter: A jump in medical device sales led to JNJ beating earnings estimates. This quarter: Earnings are expected to have declined by nearly 5%, LSEG data shows. What to watch: Tariffs will be top of mind for J & J investors as the company reports earnings, with President Donald Trump threatening last week to impose a levy of up to 200% on imported pharmaceutical products . What history shows: J & J has beaten earnings expectations every quarter since 2011, Bespoke data shows. Morgan Stanley is set to report the latest financial results in the premarket, followed by a call with analysts and investors at 8:30 a.m. Last quarter: MS earnings beat expectations thanks in part to a 45% jump in equity trading revenue . This quarter: Analysts polled by LSEG expect earnings and revenue to increase by more than 6% each. What to watch: Morgan Stanley's results could get a boost from the bank's wealth management business, according to Jefferies analyst Daniel Fannon. "MS's [wealth management] transactional revs should benefit from elevated commission activity (est +30% y/y ex-DCP), with some revenue offset from the 1-month billing lag in WM mgmt fees that will miss out on June's big rally in equity markets," he said. What history shows: Morgan Stanley shares average a 1% advance on earnings days, per Bespoke. Goldman Sachs is set to report earnings in the premarket, followed by a call at 9:30 a.m. Last quarter: A boom in equities trading revenue led to GS topping expectations . This quarter: The banking giant is expected to report a 10% increase in earnings from the year-earlier period, according to LSEG. What to watch: Goldman shares have been on fire this year, up 23%. Can the investment banking behemoth's results add to that momentum? What history shows: Goldman Sachs earnings have topped earnings expectations 86% of the time, but the stock is usually little changed on earnings days, Bespoke said. Thursday Netflix is set to report earnings after the stock market closes at 4:00 p.m. A call by management with analysts and investors is scheduled for 4:45 p.m. Last quarter: NFLX posted a large earnings beat as revenue grew by 13% . This quarter: Analysts expect a 45% year-over-year increase in earnings, according to LSEG. What to watch: Here's what Citigroup's Jason Bazinet had to say last week about Netflix's upcoming report: "We expect NFLX to report 2Q25 revenue and EBIT modestly ahead of sell-side estimates driven by FX tailwinds. Beyond results, investor[s] ... will likely focus on updates to [the] firm's ad-tier, subscriber trend commentary and the firm's evolving live content strategy." What history shows: Bespoke data shows Netflix has beaten earnings expectations 82% of the time.
