Jamie Dimon, CEO of JPMorgan Chase, testified in the HART Building on December 6, 2023, before the Senate Bank, Housing and Urban Affairs Committee entitled Annual Surveillance of Wall Street Companies.
Tom Williams | CQ-Roll Call, Inc. |Getty Images
The more Jamie Dimon worries, the better his bank seems.
As JPMorgan Chase has become bigger, more profitable and more important to the US economy in recent years, the Star CEO has grown more vocal about what’s going wrong.
In the best of times and at the worst, the outlook for Dimon is tough.
Whether it’s his 2022 forecast when the “hurricane” hit the US economy, his concerns about the post-World War II world order, or his attention to America hitting one punch of recession and inflation, it appears that Dimon is racing all revenue reports, television appearances and investors’ events with another subtle warning.
“His track record as a bank is incredible,” said Ben McCovac, a board member of four banks and investors, through his steady strategic value banking partner. “His track record of forecasting the economy is not that good.”
For his 20 years running JpMorgan, Dimon, 69, has helped build financial institutions, unlike what the world saw.
Dimon’s bank, a vast giant in both Main Street Banking and Wall Street High Finance, is, in his own words, the end-winner in terms of money. It has more branches, deposits and online users than any peer, and is a major credit card and small business franchise. Both trading and investment banks have the highest market share, with over $10 trillion in movement every day surpassing the global payment rail.
“Warning shot”
A review of Dimon’s annual investor letters and his official statements in 2020 shows a clear evolution. He became CEO in 2006, and his first decade at the helm of JPMorgan was consumed by the US housing bubble, the 2008 financial crisis, and its long aftermath, including the acquisition of two failed rivals, Bear Stearns and Washington Mutual.
But by the time he began his second decade leading JPMorgan, when the legal hangover from the mortgage crisis began to fade, Dimon began to see new storm clouds on the horizon.
“There’s going to be another crisis,” he wrote in an April 2015 CEO’s letter, meditating on potential triggers, noting that the recent turnover of US debt is a “warning shot” for the market.
The text includes the beginning of more frequent financial warnings from Dimon, including concerns about a recession that didn’t happen until the 2020 pandemic caused a two-month contraction, as well as concerns about market meltdowns and bulging US deficits.
But it also marked a decade when JPMorgan’s performance began rapping rivals. After leveling for several years with profits of around $20 billion a year, the vast machines that Dimon overseen began to get serious.
JPMorgan generated six record year profits from 2015 to 2024, twice as much as Dimon’s first decade as CEO. JPMorgan is now the world’s most valuable and publicly traded financial company, and spends $18 billion a year on technology, including artificial intelligence, to stay that way.
Dimon appears constantly worried about the rise in economic and geopolitical turmoil, but the US economy continues to move together. This means that unemployment and consumer spending are more resilient than expected, allowing JPMorgan to suspend record profits.
In 2022, Dimon told the room’s professional investors:
“That hurricane will soon come down the road and come in our way,” he said.
“This may be the most dangerous time the world has seen in decades,” Dimon said in a revenue release the following year.
But investors who listened to Dimon and made their portfolio more conservative would have missed out on the best two-year run of the S&P 500 in decades.
“You look stupid.”
“That’s definitely an interesting contradiction,” McCovac said of Dimon’s downbeat remarks and his bank’s performance.
“Part of that may be part of Jamie Dimon’s brand construction,” the investor said. “Or if something is bad, you have a win-win story where you can say, ‘Oh, I called it.’
Bankers know that it’s wiser to pay attention than optimism, according to former presidents of the top five financial institutions in the United States. For example, Chuck Prince, former Citigroup CEO, is best known in 2007 for his unfortunate comment on the mortgage business, saying, “As long as the music is playing, you have to wake up and dance.”
“If you’re overly optimistic and things don’t work, you learn that there are far more downsides to your reputation,” said the former executive who asked to remain anonymous to discuss Dimon. “It’s damaging your bank and you look stupid, but on the other hand, you look very careful and thoughtful banker.”
Banking is a business of ultimately calculated risk, and its CEO must align with the downside of the possibility that it will not be repaid on the loan.
“It’s an old cliché for a good banker to carry umbrellas when the sun is shining. They’re always around the corner and always know what’s not going to work,” Mayo said.
But other longtime Dimon Watchers see something else.
According to Portales Partners analyst Charles Peabody, Dimon has a “impure motivation” for public comments.
“I think this rhetoric is about his management team focusing on future risks, whether or not it happens,” Peabody said. “I think he’s soaked into their culture that it’s a consistent war room type vibe because he’s trying to make sure they don’t get complacent.”
Despite the fact that his bank generated a record $58.5 billion in profit last year, Dimon has no shortage of worry. The Ukraine-Gaza conflict has rageed, US national debt has risen, and President Donald Trump’s trade policy continues to surprise his enemies and allies.
Bank logo cemetery
“It’s fair to observe that he’s not omniscient and that everything he says isn’t happening,” said Brian Foran, an analyst at Truist Bank. “He’s not convinced that X will happen, he’s coming even further in terms of X being necessary to prepare.”
JPMorgan was better positioned at higher interest rates than most of its peers had in 2023.
“For many years he said, “Prepare for 5% for 10 years. We all thought he was crazy. “We’ve seen that being prepared isn’t a bad thing.”
Perhaps the best explanation for Dimon’s Dour Outlook is that no matter how big and powerful JPMorgan is, the financial company can be vulnerable. Financial history can sometimes make managers happy or greedy.
In fact, the unused bank logo cemetery includes three Bear Stearns encased by JPMorgan, the Washington Mutual and the First Republic.
At the Bank Investors’ Day Meeting this month, Dimon pointed out that JPMorgan is one of the only companies in the past decade to earn annual revenues of over 17%.
“Back to the previous decade ago, a lot of people made more than 17%,” Dimon said. “Almost every one has gone bankrupt. Have you heard what I just said?
“Nearly every major financial company in the world did very little to do that,” he said. “It’s a tough world out there.”
