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Greetings, as always, from the sidelines of the JP Morgan investment conference in India. We are honored and very pleased to speak with Jamie Dimon, CEO of JP Morgan. Jamie, it's so nice to see you here. Thank you very much. Prashant, I am very happy to be here. What's causing the biggest stir this time?
What is happening? Tell us a little about your visit this time . Yes. You know, I come here about every year, even twice a year. What if you look behind my back? This is our 11th conference. I've been coming here since 2005. When I first arrived, I think we had 6,000 employees. We now have 60,000 employees.
Of course, there are many technical areas, investment banking. We cover 200 companies in our research. The research covers the entire world. We might have three or four clients here that we work with, and 600 multinational corporations come here. We serve Indian companies as they go global. We have seen the country grow.
We grew up with her and it was a wonderful experience. You know, you have one of the fastest growing economies in the world. So we have been a consistent investor in India to be a part of helping build your country. And I think your growth here over the years has been very noticeable. Jamie , the relationship between the companies is of course very strong, and there's a lot going on.
What about relations between governments? I think they've gone a little wrong. We were sitting here last September and I think you said that India and America should be best friends. That is, India can remain non-aligned, but we both should try to become best friends. But things didn't quite work out that way , did they?
This is unclear. I know what you're talking about. I think you can be non-aligned. It may be difficult for the world, but given where you are and who your neighbors are, we must reach out and be friends. I believe we are your natural partner. You are the largest democracy in the world, we are the oldest democracy in the world.
We do a lot of business together. I think we're probably your largest foreign direct investor. And we are probably the largest market for your companies abroad. Yes, we started negotiations, and if you remember, there was a trade agreement about a year ago, but there were many problems that prevented it from being completed.
And I would like to see it completed, you know, I think it's important to have stability and so on. Today, things are still more complicated, but I would urge both governments to sit down at the negotiating table and try to conclude this. And, uh... But do you feel like we've moved forward or taken a step back?
What is your assessment? It's obvious that we haven't made any progress , right? So the situation stands still . And, you know, we have so much going on right now. I hope this is not shelved because I think it is important for India. I think this is important for us. You know, many of us travel the world.
Consistency of rules , consistency of laws, consistency in the treatment of capital—all of this is important. So...uh... You know, one thing, and I'll just move on to the next one, but is this... And it's also been made much more complicated by the war in Ukraine. Certainly. And I understand that. Last time we sat down, you spoke passionately about this and your perspective.
But the bill on sanctions, for example, the one concerning Russia. One of them. New. I mean, I don't know if you have any thoughts on this . Yes, I think, first of all, these are the powers granted to the president. He may or may not use them. I think the president probably doesn't want to destabilize the oil and other markets.
I understand the concerns in America about buying Russian oil. I think in this case we will respect the fact that some of this oil is refined and imported. If they don't buy it here, they'll have to buy it elsewhere. This may not be the type of oil that these refineries need. So I hope America will weigh everything and understand these issues, and not punish India and the global oil markets by doing what is necessary to fight Russia.
I think we should do more to help Ukraine. And there are many ways to do this, by the way. This could be one of them. But I'm not sure if we should impose any tariffs on your oil. We should talk to you about what you do and how you do it, and, um... M-um. I mean, you know, last time we talked about Russia and Ukraine.
And now you have another front, which is this whole situation with Iran, right? What are your thoughts on this, Jamie? There seems to be no path to de-escalation here. Does he even exist? What do you think? You know, the situation in Ukraine has actually worsened. Iran is in a state...Iran has been harmed, but it's a kind of stalemate.
Honestly, I don't know. I see the same thing as you. The situation could go either way, and, you know, I would like to see peace on Earth. I think it's wrong to pretend that Iran isn't an aggressor , that the threat wasn't imminent, because they've been killing people all over the world for 47 years.
And why the entire free world puts up with this is a mystery to me, but I would like it to be resolved without them having nuclear weapons. I believe this is very important literally for the future of all humanity. Not just for future oil prices. But right now, as a result of what's happening, oil is worth over $100.
This affects consumers all over the world. For example, in the US, 70% of the economy is consumption, right? That is, GDP is based on consumption. What do you think? Do you think we are doomed to higher prices for a long time? I think there are many reasons why prices can remain high for a long time, and this is one of them.
You know, I think inflation has been pretty stable. It is obvious that the rise in prices for oil and petroleum products is somewhat complicating the situation. But it is very difficult to compare consumer prices with death, destruction, and nuclear war. I think when people say, "Well, it beats fuel prices." I completely sympathize with Americans who have to pay more.
So, look, I hope this gets resolved. I am not a political expert. I do n't know what's happening on the ground. Of course, I get information from people, but I don't know more than others. We talked a little about Russia and Ukraine last time. I mean, just an assessment of the markets, your views on it.
I mean, you said the situation got worse . Yes, because it has been going on longer than the First World War. You know , we have 500,000 dead. I mean, you see there's a drone war going on. The scale has increased. I think Ukraine is incredibly protective of its freedom, and also, in my opinion, the freedoms of the free world, but Russia has gone into full-blown war mode.
They are attacking, you know, everything in Ukraine right now. So, things got much worse. And that's what happens with wars that last a long time. They are getting more terrifying. And sometimes they involve other people. When you go to Europe, and I just came from there, there is sabotage, and they are almost certain that it is the work of the Russians in France, Italy, Germany, Great Britain.
It's not very good and I don't know what will happen there. I think we'll easily be talking about this for another five years. You know, we talked about monetary policy and the fiscal situation. I think what happened because of these two conflicts increased the pressure. As a result, inflation remains high.
We have seen rates rise. So I wanted to know your thoughts on this . By the way, last time we were waiting to see who would become the Fed chairman, the new Fed chairman. We have a new Fed chairman. We heard what he said and what he did. Jeremy, do you think this is the beginning of a rate hike cycle?
I think very highly of Kevin Warsh, he is a brilliant professional and raises many important questions. I am in favor of creating a working group, I am in favor of raising questions and asking: can we work better than before? I don't think what you see is happening just because of the war. I think there is a huge demand for capital.
Typically, rates depend on inflation and demand for capital. There were many arguments years ago that this statement was correct, so rates will be low for a long time to come. Now we can look at capital needs, where a significant share is taken up by the public debt of all countries, not just the US, but the rest of the world.
These are huge numbers. And it's not just AI, it's capital spending, infrastructure, remilitarization. The demand for capital is growing, and these factors could well push rates up. Also, you know, maybe some inflation due to other factors, but that could have happened anyway, so, um, and, you know, the central bank just has to deal with it .
So, do you think the market is pricing in a lot more than will actually happen in terms of rate hikes? Well, the market... I'm talking about the bond markets, for example, have already reacted, right? I mean, the profitability is already higher. Market interest rates. Last year they were here, probably at 4% for 10-year bonds.
Now they are at 5%, and I think inflation has been more resilient than people expected, which I... You mentioned that last time as well. Yes, and I believe this remains relevant in the future. And I think there are a lot of things about inflation that are, of course, data-dependent. So you can imagine the Fed saying, "I don't care about the data.
We'll do whatever we want." But I would ask, "What is data ?" You know, is the data today's figures or monthly? The data itself is not of good quality, because if you look at it and analyze it, you say, "I wouldn't trust these adjustments and how they were derived." Are these figures for the last 6 months?
What about data that we know about, but it concerns the future? Remilitarization, infrastructure spending, AI spending, you know, current government deficits, because that will also affect inflation. So, part of this inflation rate may already be predetermined. It's not about what the Fed will do in the next hike, of course, they have to react to what they see.
So, we'll see. I hope that inflation will remain at this level or start to decline. I'm not betting on it. I think there's a chance that won't happen, and it might even grow a little. Perhaps the 2% figure is not entirely accurate . It should be higher. No. Oh no. I believe they should stick to 2%. OK.
I think inflation is a long-term problem for countries. I think it's wrong to change it now. Perhaps after the work of the special working groups, they will change this, but it should be a very considered decision. Or maybe even less than 2%. And there are governments that have supported the 1% for a long period.
AI will do it. I mean deflation, productivity growth, etc. It probably will, but not next year. To conclude this thought: are we in that era—I think it started not now, but maybe a few years ago—where the stakes are globally, in developed markets...? I mean, we see what's happening with bond yields all over the world: Japan, Germany, Europe.
I mean, everywhere, right? Is there a trend towards increasing bond yields in general? Now it might be a little higher and longer. Yes, I think there's a good chance that's true. This is true. Yes. And I...but I don't bet, I'm not a hedge fund. I don't bet on such things. I'm looking at...No, just your opinion.
I mean...no, I don't have any other opinion than probabilities and possibilities, because I don't think you can say, "this is what I think." But I believe that the chances of their growth are higher than others think. And I tell clients: you have to be prepared for any economy, for volatility, regardless of the prices: for oil, for cheese, for wages, for health care—all of these have volatility, but credit and interest are a big part of it.
And, obviously, for banks, this is one of the most important parts . Jamie, do you have any perspective on the US midterm elections in 6 weeks? You know, all of this will have an impact, right? I mean, I know, like you said, it's hard, but the human toll, the interest rates, the price of gasoline, etc.— it's all the same, but we have what we have .
How do you feel? I look at Polymarket and PredictIt and I think that... by the way, there are a lot of professionals in those markets , and you should know, I read that only 1% of people make money. So these professionals are pretty good at taking money from the 99%, but according to PredictIt, the House of Representatives has them at 80% or 75%, and in the Senate, I don't know if it's a distribution or something.
It happens differently, and it can change. In the election, you will be amazed at what can happen in the last few weeks. Sometimes divided government works better for the people. They have to make compromises, try to resolve some issues. I hope that happens. This is what, you know, the president does together with Congress.
Let's address these big, complex issues that, if resolved, will benefit growth and inflation. Now write one down. Immigration. You know, he established border controls, which I think all countries aspire to. Now that this is there , you know, we need to address the DACA issue. DACA remains, a merit-based system, a path to citizenship for law-abiding illegals, which most Americans would agree with , because they love immigrants they know, but fear those they don't.
Most immigrants who come to the US want to be Americans, we need a more merit-based system and a proper asylum system. We need seasonal workers, so this will actually help curb inflation and boost economic growth. Yes. So, you know, something like this, maybe . We couldn't agree on this for years, but if you poll Republicans and Democrats, they want to do it.
That's pretty much what I said. So, there are a million other details, but do you think there will be some division in this election? It seems so. Yes? Yes. I mean, capital expenditure on AI, I think we talked about that last time. On the contrary, everything only accelerated. I mean, stock markets, of course, we see these pullbacks from time to time, but overall, from what we've heard after the quarterly reports of big companies, they're spending more and more.
They will continue to spend more next year compared to this one. What do you think, Jamie? I think you said it was good. Perhaps, as in any boom period, there will be those who will not make it. Is that still your opinion? Yes. People remember that we have budget deficits and incentives, and AI is not a direct incentive, but the investment volume of the hyperscaler ecosystem has grown from 300 billion last year to 700 billion this year, and next year it could reach a trillion or more.
That's like increasing GDP by 1% every year. Of course, this can increase inflation a little , because you hire people, build factories, buy equipment, copper wires, power plants, and so on. But this is incredible technology. So in the future it may well contribute to deflationary processes . Um, and it looks like it's going to continue, but we definitely can't look at an ecosystem like this and declare all the winners and losers.
So while all of this can pay off , you can't say, "Well, here's 100 people involved, it's going to be this one, that one, and that one," because, you know, in most cases, if you look at the development of railroads, automobiles, the only real exception is electricity, because it was heavily regulated and subsidized, not subsidized by the government.
So , the internet can be a good example, where there are a lot of names you've never heard of that didn't survive, and a lot of names you didn't know about that became incredibly successful . Yes. You may have new providers, new types of chips, new types—I'm talking about a 5 or 10 year perspective.
I'm not talking about next year. I don't know. A question about ROI, Jamie. So, are you worried about that ? Namely: what do you get in return for everything you put in? And it all comes down to user adoption. Is this for ourselves? I mean, in general . Capital expenditures that are being made. This is what I think companies, when they do something, they will look at the benefits they get.
It's not just about return on investment. Sometimes it's simply a prerequisite. You can't, you know, if it really improves the customer experience, you might not be able to calculate the profitability, but you want a happy customer. Um, and yes, I think there will be profitability because companies will look at how much they pay, what is the benefit, how does it work, does it improve their business.
And these things will also change along with the value of the token. The other day I saw a software company that claims it can analyze your data, your usage, all your questions, and then send a calculation request to the right tool: the best, the fastest, the cheapest, not the most expensive. And now we have many examples of us using the most expensive solutions to answer very simple questions.
And of course, you will be able to manage this over time. Uh, but don't you think this comes anywhere close to causing a market crash in that sense, Jamie? I mean , do you think it's possible, but nothing dramatic? I mean, assuming that could happen...I don't know if it would cause a market crash. That is, there may be a market correction, and this may be part of it.
I'm not sure that's her reason. OK. China, Jamie, there have been reports that you will be at the White House when President Trump and President Xi meet this Thursday. What should we expect? This is something you have talked about before regarding the relationship between the two countries. Well, they both talk about making progress, you know, in fact Minister Besson said the other day that we are making progress there.
I think cross-border trade , you know, shouldn't be subject to tariffs . You know, raising real issues, talking about AI, thinking about security around AI. I think that's what they should do. Fully interact. You know, we won't agree on everything. Given that they are in a way helping and inciting Russia.
Obviously, we are on different sides of this issue. So it's a complicated thing, but I hope they raise all these issues, and it's important for the whole free world. Um, no. When you look back, and I was just, you know, walking in, talking to someone. It's been 18 years since Lehman, Jamie. A lot of time has passed.
You were one of the key figures who, you know, led the industry through that very critical time. Are there any reflections and conclusions from this, since we constantly hear calls for collapses, crises, etc.? Well, I mean, it happens , but never when it's talked about. I don't know if you have any thoughts.
They repeat themselves, you know. If you look at all of them, many were related to real estate. Sometimes wholesale, sometimes retail. But there is always credit leverage involved. Aggressive accounting is always present . There are certain common themes , yes. Yes, people become overconfident , they take out too much credit, they think there is no chance of anything bad happening.
So, the way we run our company is important. We are looking at this whole spectrum of results. You know, we can handle higher rates, lower rates, markets falling 40%, credit spreads widening, yield curve shifts—we can handle all of that. But the reason for doing this is not to guess. We want to be there for our customers and your country, India, in all circumstances.
If we perform poorly , we will have to lay off people and cut costs. And I never want to be in that situation. I'd rather sacrifice some of the profits today to protect us from this. We do that. And this is our goal. I really think there are more risks today. We have already talked a lot about them.
If you add them all together, it becomes a long list. I would do everything I can to address these issues and help resolve them. We are trying to make our small contribution to this. Mr. Raymond, what's next for JP Morgan and for you? I mean, of course, your plans in India. Yes. Well, India... I think if we meet again in 10 years, we will have 400 companies in the research department and we will cover 2,000 companies.
Your economy will likely triple in 10 years . And that's exactly our plan. We will continue to build, working with your government and customers here. This is our job— hopefully, to make people's lives better. Jim, it's nice to have you with us. Thank you very much again. Sean, thank you. Always happy. Yes, thank you.
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