저자: CNBC-TV18 · 외국인
다듬은 글
hello and welcome to the global dialogue. I'm Shireen. The world is going through an immense amount of uncertainty. There is a health crisis, there is an energy crisis, there is an inflation crisis, and there are geopolitical flashpoints that we have to contend with. India stands out relatively as a much more stable destination. Joining me now, for his view on where things currently stand for the global economy and for India, is JPMorgan's Jamie Dimon. Jamie, many thanks for joining us here on CNBC-TV18.
I'm always glad to be back, and I'm thrilled to be here. I'm only sorry I couldn't be there in person, because I very much enjoy visiting India every year.
Before I talk to you about India, let me ask you about the state of the global economy. In June you said we should be bracing ourselves for an economic hurricane, and you weren't sure then whether it would be a minor one or a superstorm. As things currently stand, which is it likely to be?
Earlier I said we have storm clouds out there. I think those storm clouds have hit. There's a lot of turbulence out there. I was never trying to predict a hurricane. I was simply trying to explain to people that it could be a very modest storm, one that dissipates quickly, or it could be a hurricane, and people should be prepared for things getting worse. There's more quantitative tightening, there's the tension between America and China, and these are very serious things that can produce bad economic outcomes.
Speaking of bad economic outcomes, are you now penciling in the worst-case scenario? Central bankers have no choice but to keep tightening, and at this point we've seen further deterioration in Russia and Ukraine and further tension between China and the US over Taiwan. Are you bracing yourself for the worst outcome?
Maybe you'll be surprised, but I said in June I expected all of those things to happen: more inflation, higher rates. I talked about an unpredictable war, and wars are unpredictable. I still think the range of outcomes is wide, and people should prepare for it. What concerns me much more is the humanitarian crisis. Volatile markets we can all deal with, but a lot of people around the world are being hurt by these conditions.
Absolutely. On the Sustainable Development Goals, we are off track on nearly every single one, and it looks like the 2030 timeline is unlikely to be met. But let's talk about India, Jamie. It would have been nice to have you here in person. What is the outlook on India at this point, especially given what's happening around us?
I think it's very good. Since I've been coming to India, I've seen a nation that has grown dramatically over time. We have 40,000 people there, and it's our second-biggest destination for technology, so it's very high-tech. Your education systems are excellent, and a lot of things are going well. You've done a lot of really good things: biometric identification, opening bank accounts, trying to develop your infrastructure, and getting rid of bureaucratic and regulatory burdens. India should be the fastest-growing nation over the next ten years. If it isn't, it will be because it didn't do all the right things. If you do those things, the outlook is very bright. Every nation has to make sure the rules are right, the regulations are right, and capital is treated properly. Rule of law, bankruptcy law, and the tax code: if you get those right, the world is your oyster.
We already have a lot of that in place, and of course more work needs to be done, but many of those reforms have already been taken forward. One thing the market will watch closely is the possible inclusion of Indian government bonds in the JPMorgan Global Bond Index. The expectation is that we could hear a decision on that sometime between September and October. Would it be a legitimate ask to have India included in the bond index?
You should ask me that. It is a sign, and we are waiting for that decision.
You talked about fund flows, Jamie, and I want to understand your outlook on fund flows into emerging markets like India, given that the Fed is now hiking and may need to hike even more aggressively. What is the trajectory on rates you are working with?
When I talk about those storm clouds, I say it varies country by country. Some countries benefit from a strong dollar and some get hurt by it. Some sell commodities, and some don't buy a lot of oil, so it really is country by country: what they borrowed and how much debt they have. But it does cause tremendous flows of funds across markets. Another thing about the dollar is that it has been strong, and that affects everything.
Let's talk about the stock markets. The correction we've seen in global markets, India has been a relative outperformer. What is the outlook for global equities in light of the uncertainties you spoke of?
Bond prices affect stock prices, sometimes dramatically, and you've seen some of that. Interest rates have to go up another 50 or 100 basis points, and that will affect stock prices. It will affect growth stocks much more than value stocks, and it will have less effect in India, because even though you have a lot of growth stocks there, the growth prospects are so good for so long that it will have a different effect on people investing long-term money in India. To give you a striking number: at 1% interest rates, a dollar a year is worth about a hundred dollars. At 10% interest rates, it's worth about six or seven, or ten dollars, and at 10% rates about 65% of the value sits in the first ten years. At 1%, roughly six to seven percent of value sits in the first ten years. So anything whose cash flows are far out in the future will be diminished in value by higher rates. Think of Bitcoin, gold, certain types of real estate, raw land, venture capital, and growth stocks where companies are putting a lot of cash in now and hoping for profit down the road. These rates adjust everything differently, but they will adjust the value of all things.
You spoke about Bitcoin, Jamie. Given the volatility we're seeing, what do you make of it? You've always been a bit of a skeptic, but do you foresee a significant decline from the levels we're already at?
I wouldn't say a bit of a skeptic; I'd say a total skeptic, about a crypto token you call a cryptocurrency that does nothing. We believe in blockchain, in distributed ledgers, and in some of the applications that actually do something. If a token does something useful, like being part of a smart contract or giving you timely information you want, it has value. We're one of the biggest users of blockchain. What I'm pointing out is that at higher rates, an asset with no natural income has to carry the question of value, and that will affect it.
What impact is politics likely to have? You've got midterm elections in the US, the big political event in China, and the war continuing, which is causing instability across Europe. How are you reading geopolitical developments, and what implications will they have for the economy?
Surprisingly, elections normally don't have much impact on the economy in that year. But this kind of geopolitical stuff is a sea change in assumptions. After February 24th, I think that shattered the illusions of a lot of people. National security was kind of taken as a given, and now geopolitics is elevated. Ukraine did a lot to hurt relations between China and the West, and between America and others. The Western world and the democratic world now also have to think through what role they want to play: how important it is to defend democracy, and how our order could be allowed to get away with certain things. India has to figure that out too. I would love to see the Western world, in a mature and humble way, work together and create national security for each other around food, energy, and trade. Keeping the world safe with democracy is important, and it doesn't have to be done against anybody. It should be done for ourselves, and it really should be done together, in trade, in bilateral investment rights, and in opening up each other's countries. That will be far better if we do it well. I think nations are already doing some of that, and President Biden has done a good job coalescing some of it around Ukraine.
I want to talk about digitization and the competitive landscape in light of what we're seeing from fintech companies, which is playing out in India too. Fintech companies aren't making money at this point, so how do you read this, and what does it mean for JPMorgan's plans going forward?
We have tremendous competition. There are Indian banks, German banks in Germany, the big banks in the United States, and then shadow banks, which are huge. They've taken over a big part of the mortgage business and a big part of direct and leveraged lending in the United States. They also take a big part of trading. You hear about high-frequency traders and payment for order flow. Then there's fintech. There's a huge amount of investment in it. Some have already been quite successful: PayPal, Square, Stripe, to name a few. Others are around the fringes in data and a whole bunch of other services. They're good competition, and they have very little regulation relative to online custom. They have advantages, but they're not all going to make it. We can spend a lot of money building great systems for competition. I would prefer to see a more level playing field in regulation. The other thing you didn't mention is Big Tech. Apple now has peer-to-peer and buy-now-pay-later credit scoring, a white-label credit card, and bank accounts through Goldman Sachs, and that's a bank. They don't have the same legal requirements: the same AML requirements, capital requirements, registration requirements, or transparency requirements. At some point regulators will say that if you offer a product, it has to meet a certain type of regulation. Anyway, we're going to have a lot of competition. I'm very comfortable about JPMorgan, but there will be a lot of competition, and there will be winners and losers.
We would have loved to talk more about the winners and losers and about your plans, but we've run out of time, Jamie. It's always a pleasure having you on CNBC-TV18, and we look forward to seeing you back in India soon, in person next time. Keep the faith, everybody. Thank you.
Thanks very much.
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