Latest news with #ReaganNationalEconomicForum
Gulf Today
20 minutes ago
- Business
- Gulf Today
Dimon warns that US's biggest problem is ‘the enemy within'
JPMorgan Chase CEO Jamie Dimon has warned that China isn't the biggest threat to the US, it's 'the enemy within.' Dimon appeared at the Reagan National Economic Forum in Simi Valley, California, on Friday, arguing that 'tectonic plates are shifting.' 'Those tectonic plates are the geopolitics with these terrible wars, terrible proxy terrorist activity around the world, North Korea, the potential proliferation of nuclear weapons over time, which is the greatest threat to mankind,' said Dimon, one of America's top bankers. He said the other tectonic shift is the global economy, before going on to seemingly criticise the aggressive trade policies and the apparent breaking up of traditional Western alliances by President Donald Trump. 'The other tectonic shift is ... the global economy. So the global military umbrella of America, and then the global economy, of which trade is a part,' he said. 'The other parts are, do people want to partner with you? Do you have your alliances? You have investment agreements and all those various things. And they're changing.' 'Then our debt ... We added $10 trillion in five years,' he noted about the national debt, which stands at more than $36 trillion. 'You had (former President Ronald) Reagan up there talking about deficits. The debt-to-GDP was 35 percent, and the deficit was three and a half percent. Today, it's 100 percent debt to GDP ... and a deficit of almost seven percent.' 'We go into recession, that seven percent will be 10 percent, and so we have problems, and we've got to deal with them. And then the biggest one underlying both, that is the enemy within,' he said. 'China is a potential adversary — they're doing a lot of things well, they have a lot of problems,' Dimon added. 'But what I really worry about is us. Can we get our own act together — our own values, our own capability, our own management?' The CEO made the comments amid a sharp decline in trade between China and the US following the implementation of Trump's widespread tariffs. The president's trade policy has been in flux amid new agreements and court rulings. The tariffs have prompted further uncertainty in a trade relationship that significantly impacts the rest of the world. The dispute with China escalated on Friday as Trump claimed the Chinese 'totally violated' the most recent trade agreement. 'They're not scared, folks. This notion they're gonna come bow to America, I wouldn't count on that,' said Dimon. He added that he concurs with Warren Buffett, the outgoing Berkshire Hathaway CEO, that while the US is usually 'resilient,' this time could be different. 'We have to get our act together,' said Dimon. 'We have to do it very quickly.' The CEO argued that the US has a 'mismanagement' problem and that a litany of things needed to be done, including fixing regulations, permitting, immigration, taxation, inner city schools, as well as the health care system. Dimon said the US could grow three percent a year if those things are taken care of. Referencing previous speakers at the conference, Dimon said: 'What you heard today on stage was the amount of mismanagement is extraordinary. By state, by city, for pensions ... and that stuff is going to kill us.' Last year, Dimon warned about inflation, political polarisation and wars that are creating risks not seen since WWII. The nation's most influential banker, Jamie Dimon, told investors that he continues to expect the US economy to be resilient and grow this year. But he worries geopolitical events including the war in Ukraine and the Israel-Hamas war, as well as US political polarisation, might be creating an environment that 'may very well be creating risks that could eclipse anything since World War II.' The comments came in an annual shareholder letter from Dimon, who often uses the letter to weigh in broad topics like politics, regulation and global events and what it might mean to JPMorgan Chase, as well as the broader economy. Dimon also used his letter to forcefully defend the firm's diversity and equality efforts, pushing back on the arguments from Republicans who have said such efforts at Fortune 500 companies, colleges and universities are discriminatory and promote left-wing ideology. Agencies
New Indian Express
4 hours ago
- Business
- New Indian Express
Beware! There's a perfect storm heading the world economy's way
It's a familiar feeling. Fears of the next financial and economic crisis are simmering beneath everyone's optimism. In fact, such dispiriting sentiments have been around for several quarters now following the pandemic in 2020. However, when exactly will the crisis unfold is unknown. It could be six months or six years, as JPMorgan Chase's chief Jamie Dimon puts it. Among others, the trigger this time is the US government's unstoppable rise of its sovereign debt and deficit. The spending and borrowing by the world's largest economy has shot up so much that it has vampirized the long-standing belief that sovereign debt is risk-free as governments seldom default on loans. Interestingly, this was the same belief (that housing loan borrowers don't default on debt), which broke the US economy, setting off the world onto a global financial crisis in 2007-08. The fallouts were so intense that its repercussions are being felt even now, two decades later. There have been plenty of warnings in the recent past about looming trouble whenever inflation shot up, or when global supply chains shocks, or during the onset of the Russia-Ukraine war and so on. Each time, as fears engulfed markets, fiscal and monetary policymakers managed to steer the economy towards a hard, if not a soft landing. This time though, analysts say, the warnings can't be dismissed as routine cyclical noise, with some like Dimon warning of seismic shifts that could disrupt the natural order of global capital flow, currency stability, and commodity access. Worryingly, they are flashing alerts about financial, fiscal, and geopolitical structures approaching their breakpoints, simultaneously. If it happens, it'll be a dangerous scenario to even imagine. Speaking at the Reagan National Economic Forum last week, Dimon warned that the US bond market was on the verge of a significant disruption, describing it as an inevitable crack due to excessive government spending and the US Federal Reserve's (Fed) prolonged money printing policies. "The bond market is going to have a tough time. I don't know if it's six months or six years," he cautioned, adding that besides bond market breakdown, the odds of stagflation -- a toxic mix of low growth and high inflation -- are at least twice the market is currently pricing. But US Treasury Secretary Scott Bessent was quick to downplay Dimon's predictions of a debt market crisis. "I've known Jamie a long time, and for his entire career he's made predictions like this," he said in an interview. "Fortunately, not all of them have come true." Incidentally, a review of 20 years of Dimon's annual investor letters and public statements by a media outlet show a set pattern comprising frequent financial warnings, worries of a recession (which never happened), concerns about market meltdowns and the ballooning US deficit. It concluded that in the best of times and in the worst of times, Dimon's public outlook has always been grim. That said, it's undeniable that all isn't well. Here's why. Historically, the US has been relying on low-interest US Treasury bonds to support its economy. For instance, both during the 2007-08 financial crisis and the pandemic year 2020, the Fed purchased truckloads of Treasury bills just to keep its financial and credit markets afloat. But the bond markets are no longer absorbing debt like they used to. Moreover, foreign investor demand for US debt is deteriorating with investors rethinking its credibility and demanding higher yields as compensation for the risk they are taking in. It appears that investors are either selling, or are allocating fewer funds towards US assets including the dollar, stocks and Treasury notes. This is unprecedented. Treasury notes are often considered risk-free investments, but are gradually losing their purchase amid America's worsening fiscal situation. Anxiety in the bond land is also peaking, thanks to US President Donald Trump's 'Big, beautiful bill' that's likely to add to its $36.2 trillion debt load, of which $28.9 trillion is directly held by the public. Moreover, the US needs to indulge in massive debt issuances just to fund interest payments. The rising expenditure and successive governments' inability to rein in spending has sparked fears that the US is on course for a fiscal breakdown. Besides, Trump's on-again, off-again approach to tariffs, which is being contested in the US courts, has also spooked investors and tanked stock markets. The three-month T-Bill is hovering above 4.3%, annualised, the two-year is paying 3.9%, while the 10-year note -- used as a benchmark for a wide range of debt including personal loans -- topped 4.6% last week. Long-yields continued to march higher with the 30-year bond hitting 5.13% last week -- its highest since October 2023. According to one report, long-term treasuries and long-term corporate bonds turned in negative performance since September, which is rare. The only other time this happened was during the 2007-08 financial crisis. The bond volatility comes several months after the Fed began the monetary easing cycle cutting policy rates. Broader market concerns about government spending and deficit levels, especially with a major tax bill have added to bond market jitters. Last month, for the first time ever, the US lost its triple-A credit rating from Moody's, which warned that it expects US federal deficits to widen dramatically over the next decade. The US currently spends roughly $7 trillion, but collects only $5 trillion in taxes annually. The resulting deficit is a little over 6%-7% of GDP -- an all-time high. Lastly, few believe that we are in a disinflationary glide path as global central bankers have been victoriously claiming. Rather, the odds of stagflation are at least twice what the market is currently pricing, and that 'cost-push inflation can return in waves', according to Dimon. The last time it happened was in late 1970s-1980s when the US economy had a far stronger balance sheet. It was relatively in a better shape two decades ago when it managed to bail out too-big-to-fail banks and financial institutions that lacked equity capital to survive on their own. But today, given that governments are overstretched with the rising budget deficits and an expanding debt burden, the biggest puzzle is if a country's financial system will be saved at all costs in the event of a crisis.
Axios
5 hours ago
- Business
- Axios
Finance leaders fear destructive U.S. debt scenario
Hundreds of times a year, the U.S. Treasury auctions off debt securities — bills, bonds, and notes. This is how Uncle Sam borrows the billions needed to finance the government's deficits. The big picture: Top financial and business leaders, including some who served at high levels in President Trump's first term, are increasingly worried that something could go awry. The fear is that not enough buyers will show up one day, resulting in a damaging loss of confidence and a spike in all Americans' borrowing costs. If that were to happen, leaders warn, it could cause lasting damage by shifting the entire U.S. economy into a new, higher interest-rate equilibrium. What they're saying: "If you want an unpredictably wide swing in volatility, have a failed debt auction in the United States," Gary Cohn, a former Trump White House adviser and president of Goldman Sachs, said in a Reagan National Economic Forum panel Friday at the Reagan Library in Simi Valley, California. "We have the most robust debt market in the world until we don't," he said. "If there lacks interest from foreign investors, and there lacks interest from U.S. investors ... rates will move out dramatically." "One or two auctions later, you could be in a completely different system," said Cohn. "And then when the government gets to a point where it can't efficiently finance itself, we have a completely different position. And when we're there, it's almost too late to deal with." Speaking later Friday morning, JPMorgan CEO Jamie Dimon said that "you are going to see a crack in the bond market, OK?" adding, "It is going to happen." "If we don't have growth and we have these types of deficits, we're going to have an economic environment that's going to create real issues, and at some point, the bond market is going to have a problem with that," said Steven Mnuchin, Trump's first term Treasury secretary, later that day. Zoom in: Former Speaker of the House Paul Ryan discussed the role that "primary dealers," the major financial institutions that play a crucial role in the auction process, would have in trying to arrest a failed auction. "We could see a day where ... we find out that the 25 primary dealers just filled 50% of the book because the auction was otherwise going to fail and we put a gun to their head and said 'Buy it all.'" Yes, but: In that scenario, with the government strong-arming banks into buying Treasurys they don't want, things have gone horribly wrong. What's next: House Financial Services Committee chair French Hill said that a task force led by U.S. Rep. Frank Lucas is examining questions about monetary policy and market resilience for Treasury securities. "What is the role of the Fed and the private sector in ensuring that we have adequate Treasury auction space?" Hill said. Lucas will be making recommendations on what Congress might do to strengthen the market's structure, said Hill. Of note: The "big, beautiful bill" of tax and spending cuts making its way through Congress would increase fiscal deficits — and therefore bond issuance — by $3 trillion to $4 trillion relative to current law over the coming decade, per the Congressional Budget Office and private-sector modelers.
New York Post
5 hours ago
- Business
- New York Post
Jamie Dimon says his retirement from JPMorgan is 'several years away'
JPMorgan CEO Jamie Dimon said his gig isn't up at America's largest bank on Monday, insisting in an exclusive interview with Fox Business that his retirement is 'several years away.' The bank's succession planning has been under scrutiny on Wall Street in recent months as Dimon approaches two decades in the top job. 'Obviously, it's always up to God and the board,' the 69-year-old told Maria Bartiromo. Advertisement 3 Dimon gave a speech to the Reagan National Economic Forum in California last week in which he first made the call for the US to stockpile weapons. Fox Nation 'We've got some great people: there will be an appropriate time,' he added. 'I may stick around for a couple of years as chairman or executive chairman. I love what I do' The Post's Charlie Gasparino reported last week that Dimon would indeed decide to stay on in his role as CEO and that his imminent departure from the firm was far from a foregone conclusion. Advertisement The long-serving chief executive also weighed in on defense spending, insisting that the United States should be 'stockpiling bullets, tanks, missiles' rather than bitcoin. 'National security is a critical thing. So the most important thing, to me, in trade is going to be protecting our own national security,' Dimon told Bartiromo. Speculation swirled over when the Queens native might leave the bank during last year's presidential campaign, when his name was repeatedly floated as a possible pick for Treasury secretary. When the banking veteran told JPMorgan's investor day in May of last year that his succession timeline was not five years anymore, it led to an immediate decline in the firm's stock price. Advertisement 3 The Post reported last November how senior members of the Trump campaign team had sought his advice on some of the GOP candidate's economic policies. AP His views on the economy have often been sought by both Democratic and Republican administrations. The Post exclusively reported in November that senior members of Donald Trump's campaign team had been using Dimon as a 'sounding board' for some of the commander-in-chief's economic policies. An interview Dimon gave to Fox Business earlier this year is credited with convincing the president to soften some of his tariff plans. The JPMorgan boss on May 22 warned about the risk of 'stagflation' – low growth, high unemployment and rising prices – if there is a global trade war. Advertisement Four names are considered to be in the frame to take over the reins from Dimon. 3 Troy Rohrbaugh, left , and Doug Petno, right, are the co-CEOs of JPMorgan's investment banking operations and hotly tipped to take over Jamie Dimon when he eventually calls it a day. JPMorganChase They are Marianne Lake, the company's head of Consumer & Community Banking, co-CEOs of JPMorgan's investment banking operations, Doug Petno and Troy Rohrbaugh, and Mary Erdoes, who leads its asset and wealth management unit. A veteran of more than three decades at JPMorgan, chief operating officer Jennifer Piepszak was one of the frontrunners to succeed the Queens native until she withdrew from the competition in January, insisting she did not want the top job. Dimon also has another reason to stick around: the bank is building a $3 billion, 60-story headquarters at 270 Park Ave in midtown Manhattan that will include a yoga studio, a food court and even a pub. He has been a vocal critic of working from home and is slowly forcing staffers back to the office five days a week, scrapping a Covid-era policy that he sees as leading to lower levels of productivity.
Business Insider
16 hours ago
- Business
- Business Insider
Scott Bessent dismisses Jamie Dimon's debt concerns, saying none of his past predictions have been right
Treasury Secretary Scott Bessent said on Sunday that he doesn't agree with Jamie Dimon's prediction that the bond market will crack. "I've known Jamie a long time and for his entire career he's made predictions like this. Fortunately, none of them have come true. That's why he's a banker, a great banker. He tries to look around the corner," Bessent said in an interview on CBS' "Face the Nation." Dimon, CEO of JPMorgan, told attendees at the Reagan National Economic Forum on Friday that the US "massively overdid" spending and quantitative easing during the COVID-19 pandemic. Dimon predicted this will lead to a "crack in the bond market." "It is going to happen," Dimon said on Friday. "I just don't know if it's going to be a crisis in six months or six years, and I'm hoping that we change both the trajectory of the debt and the ability of market makers to make markets," he added. Bessent said the government is working on shrinking its deficit, and the administration intends to "leave the country in great shape in 2028." "So the deficit this year is going to be lower than the deficit last year, and in two years it will be lower again. We are going to bring the deficit down slowly. We didn't get here in one year, and this has been a long process," Bessent told CBS. Last month, House Republicans passed President Donald Trump's " big beautiful bill." The bill, in its current form, is expected to raise the deficit by $2.5 trillion over the next 10 years, per the Committee for a Responsible Federal Budget. The bill is now with the Senate, and GOP lawmakers hope to have it on Trump's desk by July 4. Dimon isn't the only one who has raised concerns about the US deficit. Last week, Tesla and SpaceX CEO Elon Musk said in an interview with "CBS Sunday Morning" that he was " disappointed to see the massive spending bill." A clip from Musk's interview was released on Tuesday. The full interview aired on Sunday. "I was, like, disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decrease it, and undermines the work that the DOGE team is doing," Musk said. Musk was the leader of the White House DOGE office from January to May. He announced his departure from the Trump administration on Wednesday. "I think a bill can be big or it could be beautiful. But I don't know if it could be both," Musk told CBS.
