WHEN: Today, Wednesday, August 7, 2024
WHERE: CNBC’s “The Exchange”
Following is the unofficial transcript of a CNBC exclusive interview with JPMorgan Chase Chairman & CEO Jamie Dimon on CNBC’s “The Exchange” (M-F, 1PM-2PM ET) today, Wednesday, August 7. Following are links to video on CNBC.com: https://www.cnbc.com/video/2024/08/07/jpmorgan-ceo-takeaways-from-midwest-tour-america-is-alive-and-well.html and https://www.cnbc.com/video/2024/08/07/jpmorgan-ceo-on-inflation-getting-back-to-2-percent-im-a-little-bit-of-a-skeptic-on-that-too.html.
All references must be sourced to CNBC.
LESLIE PICKER: Kelly, there is no place like home, especially when we are, yes, here on a soccer stadium that the Mahomes co-own, actually, that JPMorgan finances for the women’s soccer team the Current here in Kansas City. Jamie, thank you so much for being here. This is your 14th annual bus tour.
JAMIE DIMON: Yes.
PICKER: This time you’re visiting six Midwestern states.
DIMON: Yes.
PICKER: What are your key takeaways so far?
DIMON: Yes, so, first of all, welcome, everybody. Thrilled to be here. You know, America’s alive and well. There’s entrepreneurs everywhere. People are optimistic. They’re growing. They’re expanding, building stadiums. There’s technology in just about every city we do, wherever we go. And while society has problems, it’s quite uplifting to travel through the heartland and see all the wonderful things that are taking place here.
PICKER: And Kelly mentioned that you have a branch strategy, where you’re opening more in the Midwest—
DIMON: Yes.
PICKER: More smaller cities, more rural areas, in order to have more reach for the U.S. population.
DIMON: Yes. Right.
PICKER: How does that play a role into this year’s bus tour?
DIMON: Yes, it does. So we have — I was so happy we can go from 28 states to 48. So we’re now in all 48. And so we’re hoping — here, I think we have almost 40 branches, and we started only a couple of years ago. But we do have a new strategy, effectively, about rural, which is, be in every state to be within a drive, call it 15 or 20 minutes or 50 percent of the population, so to serve more what we call the rural community. But I think, for the person on the TV, also want to say it’s not just the branches, because people are focusing on that. We go in the branch, we come in with small business, mortgage, auto, credit cards, Chase wealth management; 25 percent of the branch in LMI neighborhoods. We bring in private banking, commercial banking, real estate banking, investment banking. And then we also bank stadiums, sports, governments, cities, state schools, hospitals. And we bring in all the things we do for the disadvantaged community, the black community, the Hispanic community, LGBT, other communities, like veterans, disabled, jobs. So we bring the full force of JPMorgan into a state and a city. And it’s just wonderful to watch. And we’re just part of the — we make the investments that help — that create the jobs, that help the business create the jobs that build communities. And so we’re just part of this wonderful economic — American economic ecosystem.
PICKER: Well, speaking of jobs, this has been a pretty remarkable week in the markets, where we have seen exceptional volatility. What do you see as the key driver? And do you think that volatility continues?
DIMON: Yes. But, you know, markets fluctuate. And I literally — I think people overreact a little bit to the daily fluctuation of the market. And, sometimes, it’s for good reasons. Sometimes, there’s virtually no reason. And you saw, this one, it came way down, it went way back up. But people are projecting. And when they project forward, it affects the markets. We don’t know if there is going to be a soft landing, a hard landing, and all the things in between. I have always been a little skeptical that it’ll be soft. On the other hand, I’m hoping it is soft. And so you will see this go up or down. But the important thing, I always tell people it’s a little bit, you don’t know what it’s going to be. And as a business, you have to be prepared for all different potential outcomes and just invest continuously. And you know, whatever happens, American society will get through this easily, other than geopolitics, where I know we’re going to speak about a little bit later. And I was with Warren Buffett yesterday. And he — we always talk about the resiliency of America. It is extraordinary. And it’s in these towns. It’s in the universities. It’s in the businesses. It’s in the governments that are always looking for ways to improve our lot in life.
PICKER: Now, you mentioned kind of the probability of a soft landing. I know that last time we sat down, about six months ago, back in February, you pegged the odds of a soft landing at about half of what the market was pricing in.
DIMON: Yes.
PICKER: The market was pricing in about 70 to 80 percent at the time. So, by that math, you predicted about a 35 to 40 percent chance of a soft landing.
DIMON: Yes.
PICKER: Given what we have seen with the data, the jobs report last week and some of the other data in the last few days, do you still expect about a 35 to 40 percent chance of a soft landing?
DIMON: Yes. Yes.
PICKER: Or do you think it’s less than that?
DIMON: Yes, about the same. I mean, first of all, it’s always good to look at the odds of what you think, as opposed to, like, get set and say that’s the one thing that’s going to happen. And there’s always a large range of outcomes. And we will all get through that. And so I’m fairly optimistic that, if we have a mild recession, even a harder one, we will be OK. Of course, I’m very sympathetic to people who lose their jobs. You don’t want a hard landing. And so — but there’s a lot of uncertainty out there. I have always pointed to geopolitics. I always think the deficits, the spending, the quantitative tightening, the elections, all these things cause some consternation in markets. And so we will have to wait and see. Does inflation really get back to 2 percent? I’m a little bit of a skeptic on that too. And I don’t look as much to the — at the short-term data as about the things that are inflationary, but are in the future, deficit spending, green economy, and a remilitarization of the world. And they haven’t really happened yet, but they are going to happen, and they’re not deflationary.
PICKER: Given that prediction, I know that JPMorgan economists are expecting now a 50-basis-point cut in September and November, and 25 basis points thereafter.
DIMON: Yes.
PICKER: Do you think, if the Fed were to do that, it would be a mistake, given some potential enduring effects of inflation?
DIMON: Yes, I mean, I hate to say this. I don’t think it matters as much as other people think. You know, the rate effect itself isn’t that critical. And, obviously, psychologically, there would be a lot of chatter about, what does it mean? What are they thinking? Are things are getting bad? So — and maybe that psychological stuff will affect the economy. But I also remind people, every day, 325 million Americans go to work, go to their jobs, take care of their families, take care of their kids, build out their house, change a job. And is it going to be affected by the Fed changing rates by 50 basis points? I don’t think so. So, if they do it, I’m sure they have good reason to do it, and I will rely on their instinct. So, I do expect they will probably do it soon, because they have seen more negative data than they had expected.
PICKER: Does that—
DIMON: But it goes back to expectations. All the expectations have been wrong too. So just always keep that in the back of your mind.
PICKER: If they were to cut by that magnitude, though, does that risk more of a stagflationary environment, which is something you have been warning about?
DIMON: No. No, I mean, stagflation would be a recession with a little bit of inflation. So, I think what they do in the short run may or may not directly affect that. Obviously, all things being equal, it reduces the chance or the depth of a recession, but I don’t know if it affects really what might happen down the road in terms of stagflation.
PICKER: One of the big concerns that the market has is the state of the consumer. And you have an unparalleled look where you sit at JPMorgan Chase on the health of the consumer.
DIMON: Yes. Yes.
PICKER: I know that you have been setting aside an additional $2 billion reserves this year for credit card in particular. What do you see with regard to the health of the consumer, and does that credit card reserve build indicate that maybe consumers are a bit more stretched and are spending more on credit?
DIMON: Yes. No. So the consumer, first of all, there’s a lot of data there, which even anyone can kind of get. We gave $6 trillion out during COVID and another $4 trillion out after COVID in terms of deficit. It ended up in people’s pockets through multiple programs, PPP, EIDL. Some went to states. Some went to cities. And that money ended up in checking accounts. So, on the consumer side, think if their checking accounts doubled. Since then, they have been spending it down. Even when it’s done being spent down, it doesn’t mean it’s recessionary. It just means, if they have to go back to prior spending, it’ll drop the GDP a little bit. But what you have seen in the market, because the bottom 50 percent of income, they have spent it down. So they’re doing what we call normal behavior, substitution. If they have an extra expense, they might do a gig job for a weekend, get — do something cheaper, less going out. The top 50 percent still have some extra. That extra will probably be gone at the end of this year, but they’re still spending it, travel, or restaurants, entertainment, things like that. So but we don’t know. But the credit card losses and other losses, they have basically normalized. That’s all it was. They were extreme — they were — normal would be 3.5 percent credit card losses. I would have told you the lowest they were ever going to get would be 2.5. They got to 1.75 or something. They have normalized. By the way, having normalized doesn’t mean they can’t go worse from here. But, there, it depends on jobs, confidence, jobs. And so you watch the job numbers, unemployment basically drives a lot of the underlying consumer credit. And, remember, the consumer has a lot of value in their homes. Stock prices are up, jobs are plentiful, and wages have been going up at the low end, which I think is a very good thing for the people at the low end. They didn’t get a pay raise for 30 years. So I know a lot of businesspeople looked at that and it makes it hard to do business, but I think it’s an important thing that we try to lift up incomes at the lower end too.
PICKER: And, in your estimation, a normalized credit picture does not indicate we are in a recession right now?
DIMON: Not at all. But I said it could get worse, but, right now, it’s just normal.
PICKER: Right now, we are not in a recession.
DIMON: Right. Yes.
PICKER: Let’s turn to politics if we can because you had an op-ed last week in “The Washington Post,” where you called for unity and you called for restoring faith in America again. In the op-ed, you did not endorse a candidate. Do you think, now that we have seen the tickets settled as of yesterday, in terms of president, V.P. for each of the major parties, do you think both of those tickets would heed that advice?
DIMON: Yes, I don’t know. And I hope they do. I hope everybody does. It was in the middle — what kind of got me going at all, I was in the middle of a book about Ike Eisenhower written by his granddaughter, who runs the Eisenhower Institute about how Ike led. And it goes through, he got the most professional people, the best and the brightest, experience from everywhere. He had people in his Cabinet from different parties. And he wanted to get policy right. And he made them work, by the way, like kind of like a business. Like, let’s get the facts, let’s do the analysis, let’s figure out what policy actually works. He also met with the opposition leaders, it said, weekly for lunch or dinner, which I think politicians should do. And you and I disagree about any issue out there, I still would like to sit down with you and try to understand you, your family, your goals, your objectives. You aren’t immoral because you think something different than I think. And democracy, by its nature, is compromise. So get the best people, figure out what you can get done. It’s not about you. It’s not about party. It’s about country and Constitution. And, yes, I hope that is. And I hope other voices come behind and support the idea that that is what politicians should be doing. It’s become a little bit, not for everybody — but a lot of them are that way. When I go to D.C., when you see people on TV, sometimes, it’s — Michael Johnson calls them the show horses, not the work horses. But there are a lot of work horses there who want to get stuff done. And then maybe they need a little help to get citizens to say, no, we’d like to see you compromise. We want to see you sit down and come up with programs for education and immigration and taxation and regulation that will foster a healthier America.
PICKER: Ike Eisenhower from Kansas, just across the river here.
DIMON: Yes. Yes.
PICKER: But, in the op-ed, you wrote, quote, “A president should put the most talented people, including those from business, in the opposite party into their Cabinet.” If asked by either Cabinet, would you serve in their Cabinet?
DIMON: No, I love what I do. I mean, I get to do these bus trips. We lift up consumers. We lift up disadvantaged. We lift up businesses through all the city and states, hospitals. This is what I love doing. This is what I’m going to continue doing.
PICKER: In your latest investor day, though, you did say that the timeline is no longer five years indicating that there is a shorter timeline by which you would potentially leave the firm and—
DIMON: Well — well, eventually, I have to leave. Now, I mean, I know that. We have got great people out there. We have a “hit by the bus” successor, Daniel Pinto. You know a lot of the other people and how exceptional they are. When I say exceptional, it’s also their heart, their curiosity, their the they engender from our employees, from our customers, which I feel great about. But even when I’m done with CEO, I might be chairman for a year or two. It depends — totally up to the board at that point. So I have a while to go before I’m out of the company. And so. But I am just so proud of the company, that it’s amazing what it does around the world.
PICKER: Former President Trump said that he would consider you if he were to win as Treasury Secretary. Is that something that you have had discussions about? Is that something you would consider doing?
DIMON: I am very happy with what I’m doing. I could say that over and over, but I’m very happy doing what I’m doing.
PICKER: So that would be a no to President Trump if he were to call?
DIMON: I’m very happy doing with what I’m doing.
PICKER: You notably did not endorse a specific candidate in this op-ed. Is there one side that you are leaning toward this election cycle?
DIMON: Well, I wouldn’t answer that question. And if I am going to do something like that, I will do it and tell — explain to people why. But I’m not going to do anything right now.
PICKER: Let’s talk about AI. Because the firm has 2,000 A.I. and machine learning experts and data scientists, 400 use cases in production — feel free to update my numbers here if they’re — if they’re stale — a newly created position of chief data and analytics officer who sits on your operating committee. What are you most excited about in terms of use cases for AI that are being deployed at this point in time within JPMorgan?
DIMON: So, just to give a little bit broader picture, we have been doing it now for 10 or 12 years. And we had a department years ago. But technology’s changed the world. I mean, it’s why we’re living longer. It’s — I think AI is going to cure cancer. But look what — look, the world today is very different there was 100 years ago or 200 years because of technology. Do technologies have bad outcomes? Yes. Planes crash and pharmaceuticals can be misused. So I think bad guys are already using AI. But the good stuff, we have 2,000 people, 400 use cases, probably 450 today. My guess, it will be — the next time we meet, it will be 800. And it won’t be 2,000 people. It will be 3,000 people or 4,000 people. And it’s — and it’s AI/machine learning and data. And inside the company, every part of the company has a mirror, so credit card, consumer, sales and trading, commercial banking, investment banking. So — and they are deploying AI pretty much at scale for risk, fraud, marketing, customer service, errors, offers. And it’s just going to get better. And we want to offer — we want to make it great for customers that they are really being treated properly. I think everyone’s going to have like a co-pilot on your shoulder. You’re going to have one. You wake up and you’re going to be told that someone gave a speech, or here’s what you would think about, here’s the weather in the drive in, and here’s all these various things. It’ll take notes for you. So, if you’re interviewing someone, it will take notes. And it may prompt you to say, ask about X. And so everyone will have that. It may very well reduce some jobs. It’ll increase other jobs just like cars did that and the electric — the steam engine did that, the Internet did that. So society will be better off. If for some reason — and I do think it’ll be regulated. And, obviously, we all have to — and, hopefully, it’s properly regulated, but — and they should make sure you protect particularly from things like misinformation. I think there are things which are quite dangerous for society. And we should be very thoughtful how we deal with that.
PICKER: Misinformation and fraud, of course, within — within the banking system.
DIMON: Well, yes. And we’re very good at that. I mean, we’re experts at that. And we use it for fraud. In fact, certainly, these fraud costs have been coming down over time. And we do a million things to try to stop all that kind of stuff. But I think the biggest one, the immediate will be political misinformation. So, like, near the end of a campaign, if fake ads, fake people, fake statements, fake news, trying to throw a state in one way or the other, we have to be very careful about that.
PICKER: Yes, very important.
DIMON: Yes.
PICKER: As we had mentioned, you have been traveling the country. You have been traveling the Midwest over the last few days. How do you think Middle America perceives the economy right now, and do you think it’s the same as what you hear on the coasts?
DIMON: Yes. Well, I think the coasts are — maybe don’t fully understand. I think all the people on the coast should take bus trips through Middle America to understand where these people are, how they think and what they’re doing. And they’re not — you don’t get this terrible view of America. It’s unbelievable. You visited this company RNGV with me today. They’re building trucks being used in construction sites, et cetera. They’re quite — they’re profitable. They’re going to expand. It’s unbelievable. And they’re just two guys who started this, I think they said in 2015. And so it makes you very optimistic. However, there’s not one America. I would acknowledge — in my op-ed, I said we should acknowledge the flaws. And the flaws are extensive, affordable housing, immigration, certain regulation, work skills. You heard it today, the — how it’s important to get these kids out of community colleges with certificates that count for college degrees, that give them jobs making $65,000 a year. But if you want to look at the part of society who didn’t do well, take the bottom 20 percent or so who earns less than $20 an hour. Their incomes didn’t go up for 20 or 30 years. And you’re not going to fix that if we’re just yelling at each other. And they also, by the way, are dying younger. Their health is worse, more suicide, more drug problems. And they’re the ones who have to deal more with crime when they go home. They’re the ones whose schools don’t work as well. And I remind people we, as society, should look at them and say, yes, there’s a problem and what are we going to do about it, we being as individuals, as companies, as government? But, to fix that, I think it’s fixable. I mentioned the thing about Earned Income Tax Credit, work skills. There are pieces that can be fixed if we have the right policy, not misguided policy, not slogans, but actual policy on the ground that works. And one of the great things about these bus trips is, you see what works. So, you sat in the room. The gentleman who runs the community colleges here is graduating kids with the skills they need who are getting these jobs making $60,000 a year at RNGV, and, if not they’re, somewhere else. And that’s what we need to do. And it’s got to be done locally, because we don’t have an EV company in New York. We have coding. We have compliance. We have got financial management. Everywhere, you have things like coding or cybersecurity. So, there are solutions. And I wish we would just focus on that and stop yelling at each other. And the other thing I would point out, it’s got to be collaboration. And I mentioned Detroit. A white mayor in an 85 percent black town gets — wins on a write-in vote, OK? I learned about the — we’re big there with 35 percent of their base in the banking system in Detroit — by Lee Saunders, who runs AFSCME, who told me how better would be if there’s bankruptcy in Detroit for his members, who I didn’t realize didn’t get Social Security. And so I thought he was right. And he’s still a friend of mine. And we sent teams in. The mayor, Democrat, the governor is a Republican, but they basically said whoever can help. They got business, government, not-for-profit, schools, unions, police, and everyone started to work to make the streets safer, make the schools work, get more skills. They got two big plants being built there, I think one Ford and one Stellantis. That’s 50,000 jobs, not just in the plant, but what supports the plant. It works. Collaboration works when you have actual policy that people work on together, and then you modify it over time when it’s not working. So, I think we should all be doing that and we can lift up all of our society. That will reduce — I think will reduce some of the anger and will reduce some of the legitimate anger. So, if you’re some of those folks, you can look at this and say, this has been unfair and we need to fix it.
PICKER: This seems like a much more optimistic Jamie Dimon on the heels of this bus tour today. I really appreciate your perspective on the macro environment, on the bank itself, and the market volatility we have seen this week, as well as what you have learned so far on this tour. Jamie, thank you very much for being here. Jamie Dimon, the chairman and CEO of JPMorgan.
For more information contact:
Jennifer Dauble
CNBC
t: 201.735.4721
m: 201.615.2787
Stephanie Hirlemann
CNBC
m: 201.397.2838
