Why Jamie Dimon wants interest rate to be 8%?

요약 보기

JP모건 CEO 제이미 다이먼은 미국 경제가 강하고 인플레이션이 끈질기다며 시장(연착륙 확률 70~80%)보다 비관적이라고 봄. 연준이 금리를 더 오래 높게 유지해야 하며 필요시 연방기금금리를 8%까지 올릴 수 있다고 주장. 영상은 고금리가 은행 순이자마진을 키우지만 예금금리 상승으로 결국 마진이 줄어들 수 있다고 설명하며, 1분기 대형은행 순이자수익 감소를 근거로 제시.

다듬은 글

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01. Jamie Diamond is the CEO of the largest US Bank JP Morgan in his recent annual letter to shareholders Jimmy Diamond acknowledged a strong US economic performance and sticky inflation he sounds a lot pessimistic than the market thans uh he said the market is pricing in about a 7 to 80% chance of a soft Landing but J but Jamie Diamond believes the odds are a lot lower than that and he also mentioned that in response to potentially stuborn inflation the interest rate would sore past 8% to give you a bit of a background the current fed uh fed funds rate is at 5.25 to 5.5% so to go to 8% % that means there would be another approximately 3% increase in the FED funds rate so Jimmy Diamond has expressed his support for Federal Reserve to stay hawkish for longer before on event happened March this year he said if he was the Federal Reserve he would wait meaning that uh the Federal Reserve should not be cutting interest rates so quickly Jamie Diamond said their credibility is at stake he said he would even wait past June and let it all sort out now it seems like Jimmy Diamond wants the interest rate to go higher for longer and even mentioned 8% why why is that how does he get benefited by that it is because large Banks typically benefit in such a macro economy higher interest rate uh means that the banks can charge more for their loans uh it's either for mortgage or car loan or business finance so which boosts the banks uh Banks interest income Banks lend out uh at higher rates while paying relatively Less on a deposit widening their profit margin okay so when the spread between the two yields gets higher right the yield on the deposits the bank pays out and the yield the bank receives on on the loans it LS out when when the spread gets um gets widen gets widened up their profit margin increases so this chart shows you uh that when um when the interest rate goes higher the net interest income of a bank increases as well so the net interest income is the total revenue earned from interest on loans Securities and other interest earning assets minus the interest paid on deposits and other liabilities however as the interest rate climb higher and remain elevated for a while the situation starts to shift the cost of attracting and retaining deposits increase as consumers as customers seek better Returns on their savings right this is because the high interest rate as the high interest rate persists customers grow more aware of the situation and expect better return on their savings forcing the banks to raise interest rates uh that they're offering on their deposits to so that they can stay competitive and retain their customers as an example right if uh if the customer is seeing is witnessing some money money market fund or cash generating ETFs that are giving uh the the investors an annual return of 5% they they would they they would of course question their banks on how much they're they're getting paid on their savings account if if there too much of a difference customers start to take money out of their Depo deposit account or savings account and put it in somewhere else like money market fund right so the the so when the bank raise their uh interest rate on deposits to stay competitive it hurts uh their margin right it hurts the bank's net interest income as showing this chart when the interest rate stays high for a while so recently the big banks have released their q1 earnings even though they beat the expectation but their forecasts are muted because the executives of those Banks warned that their core L lending income would be muted this year as higher interest rates forced them to pay up the depos deposits and this is the chart of the net interest income of the three major Banks JP Morgan uh in dark blue red is City Bank and uh the light blue is Wells Fargo as we can see the net interest income shrank um on on a quarterly basis for JP Morgan for the first time since year 2021 and for the other two Banks City group and Wells Fargo they also saw a quarterly decrease in their net interest income so I think this is the reason why Jamie Diamond is advocating for further rate hikes towards 8% because if the interest rate increases increases further it would potentially lead to a wider spread between what the banks can charge for their loans and what they must pay on deposits so meaning that it will create another surge in the bank's net interest income before the cost catch up again right so this chart shows you if the interest go up to 8% the right hand side also increase thank you don't forget to subscribe