Jamie Dimon on inflation, liquidity, deficits and stock market risk

JP Morgan Chase CEO Jamie Dimon’s annual shareholder letter is always a good opportunity to learn what the economy looks like from such commanding heights

On inflation:
‘It is important to note that the economy is
being fueled by large amounts of government deficit spending and past stimulus.
There is also a growing need for increased spending as we continue transitioning to
a greener economy, restructuring global supply chains, boosting military expenditure
and battling rising healthcare costs. This may lead to stickier inflation and higher
rates than markets expect.’

On Liquidity:
'Quantitative tightening is draining more than $900 billion in liquidity from the system
annually — and we have never truly experienced the full effect of quantitative
tightening on this scale. ’

On Valuation:
'Equity values, by most measures, are at the high
end of the valuation range, and credit spreads are
extremely tight. These markets seem to be pricing
in at a 70% to 80% chance of a soft landing —
modest growth along with declining inflation and
interest rates. I believe the odds are a lot lower
than that. ’

On the fiscal deficit:
‘In the past, fiscal deficits did not seem to be
closely related to inflation. In the 1970s and early
1980s, there was a general understanding that
inflation was driven by “guns and butter”; i.e.,
fiscal deficits and the increase to the money
supply, both partially driven by the Vietnam War,
led to increased inflation, which went over 10%.
The deficits today are even larger and occurring in
boom times — not as the result of a recession —
and they have been supported by quantitative
easing, which was never done before the great
financial crisis. Quantitative easing is a form of
increasing the money supply (though it has many
offsets). I remain more concerned about quantita-
tive easing than most, and its reversal, which has
never been done before at this scale.’


I take it as a given that Dimon, on every occasion, is talking his book.

It seems the uproar over his $80M payday, some 70% of shareholders voted against it, for below industry average performance, must have stung a bit. JPM’s shareholder return has improved significantly. I take that as a prima fascia case that JPM has another illegal scheme in operation. Maybe I should take my loot and go home, before this scheme is exposed?



Do you own JPM stock?


Yes, I do. Up 22% over a two year hold, now. It was under water, before it perked up last November.


For the halibut, I looked at some other banks over the same period. Wells Fargo, which has it’s own record for corruption, is the only other one showing a gain. Bank of America, 5/3. and Citi all show a loss over the same holding period. Like I said, prima fascia case Dimon has another illegal scheme operating.


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JPM shareholder return, from the 2023 annual report. After years of zukky performance, JPM is suddenly the smartest guy in the room? They paid out my divi on April 30. Sold today.