JPMorgan CEO Jamie Dimon on narrate of the US economic system, industrial real estate dangers and AI hype

We're going to get to all of that in just a few minutes we do begin today though with a halftime special event Jamie Diamond with us exclusively today from the JP Morgan Global high yield and leverage Finance conference in Miami Beach our Leslie picker is there with him let's take it away hey Scott thank you and thank you.

So much to Jamie for being here so we are at your high yield and leverag finance conference in Miami you've got Executives dealmakers investors all kind of coming together talk about the financing environment how would you characterize seite confidence levels now first of all it's thr to be here thank you for doing this this our 29th.

Conference I've probably been to 20 of them since I became CEO of J Morgan Chase you look you you look at you always got to look at markets that they change their mind pretty quickly but right now conference is up there's more m&a chatter e Equity Market open a little bit spreads are getting close to historical lows which is means you know.

There's a lot of money chasing uh a high yield deals so things are kind of open markets are high people feel it so so far so good that sounds to run somewhat counter to your more bearish views I know you said um in fourth quarter earnings that uh last month that inflation may be stickier rates may be higher than the markets expect is that.

Still your base case and what's kind of fueling that more cautious tone right now yeah so the way I look you know remember in 1972 you felt great too and before any crash you felt great and then so things change so you have you got to look ahead I do think there are things out there which kind of concerning we got an eye on and so and why are we.

Doing so well a lot of is fiscal spending and fiscal spending has a multiplier too so I just think it may not come down that quick and people may be surprised so when people talk about you know the market is kind of pricing and soft Landing that may very well happen but you know the odds at 70 or 80% I would give him half of that that's.

All seven or eight rate cuts no 7 7 70 or 80% chance will have a soft Landing I give it half that we may very well have one but I think there is also higher chance in the market think of race being a little bit higher the other thing I think is always a mistake to do is look at just the year all these factors we talk about QT fiscal spending deficits.

The geopolitics those things may play out over multiple years but they will play out and they will have an effect and we just don't know what they are so I'm just you know my mind I'm kind of kind of cautious about everything you're hedging um I want to ask you about commercial real estate we've got nearly a trillion dollars of commercial multif.

Family real estate debt that will mature this year about half of that about a trillion 929 billion worth um half of that is owned by Banks mostly Regional Banks there the rest is either securitized or due to non-bank lenders um we've seen higher levels of defaults in certain pockets of uh the market and a slump in property prices recently do.

You think that stress in commercial real estate will ultimately be the source of the next credit event you know first of all put commercial in perspective with consumer the consumer markets are far bigger so it happened 07 or 08 this isn't that kind of thing and a lot of these owners of this can handle what you call stress so in the banking system I'm.

Just going to focus this on office for a second because there's Warehouse there's data centers there's hospitals there's uh and some of that stuff is actually well done uh but if you take just offices first of all they're worth less because interest rates when interest rates go up 300 basis points whatever you own with their cash flow is worth.

30% less and so people that's not a crisis that's kind of a known thing and then there's the you know if you have a recession yes it'll get worse if we don't have a recession I think most people will be able to muddle through this you know refinance put more equity in and of course when you talk about defaults being higher part that's just a.

Normalization process they were so low for so long so in all of credit you're watching this things go up but they're not at a crisis level and just kind of going to normal so yes if rates go up and we have recession there will be real estate problems and some banks will have a much bigger real estate problem than others so you think you know as you kind.

Of assess the the landscape and and Regional Banks there'll be more of a a wack-a-mole than a kind of domino effect as long as the economy stays like this there'll be more of a waca there's no there should be no domino effect the problems you've seen were kind of idiosyncratic problems with S Silicon Valley First Republic uh New York.

Community Bank uh and a lot of these you know it's also it's very local I mean you talk about real estate I think when you say blanketed if I call it an office I'm I have great leases in it it's fully leased out 20e leases that's completely different than the SPEC Building so you really got to dig deeper and you know we try to do that we look at credit about.

Where it is it'll be pockets are you concerned at all about just the migration of of lending taking place in the non-bank financial sector I mean we're here at the global high yield and leverage Finance conference I know there are a lot of private credit managers here uh but that's something that's caught the regulator's attention.

As well well finally make maybe wake them up a little bit first of all I don't mind competition some of these people who you call private credit are excellent they know what they're doing that doesn't mean they all do and if you when you look at policy issues about private Credit First of all we've been doing it a long time just keep in mind.

Like we make loans Middle Market loans they came through with a bunch of stuff that made it simpler unit trch actually more expensive unit TR different covenants you know you can sign it quickly no pricing but there are other things less transparency less liquidity no secondary markets no research so you got to look at the whole thing what.

Works and what doesn't work it will sort through it it will be a competitor I have no problem knowing that we're going to be a competitor and a lot of smart people out there you know they've been on TV saying you know they're D I said they're dancing the street but they agree with me this time they absolutely the bank you know banks are being pushed.

Out of a whole bunch of different businesses and you know I always say if that's what the Regulators want then do it I'm completely fine with it JP we all do fine but it should be done with the forethought not accidentally like I said there are some negative so I think if you have a major recession you'll probably see some issues in.

Private credit with systemic you know not I don't really think so but it might be in ways we don't understand today speaking of competition and regulation last week we saw a major deal with Capital One uh and it's deal to acquire discover the potential there is to reshape the the credit card industry the combination would create the largest.

Card issuer in the US surpassing JP Morgan Chase for now as me for now so if this deal is approved does it create more competition for you I look I I think companies should be allowed to do and innovate and grow and merge and try to challenge things I think that's good so I think it's a mistake to act like it's bad it's good for competition in.

Fact some we I think they should allow some of these smaller Banks to emerge if that's how they they think they can best compete with JP Morgan you should let them it may not work in every case but they you shouldn't predetermine that you should let the market uh predetermine that in this particular thing there's the credit card business which is.

They'll be bigger more scale they're very good at it I mean I have enormous respect for Richard Fairbanks and cap one um and then there's the networks the the debit Network and the credit Network the debit Network may have an unfair Advantage versus US of course I have a problem with that you know like why should they be allowed price debit.

Different than we price debit just because of a law that was passed I don't know what the plans are really you know I like I said I have a lot of whatever Richard does I pay a lot of attention to do can they actually create another credit card Network I don't know um but you know my view is let them compete let them try and if we think it's unfair.

We'll we'll complain about that but I'm not worried about it really uh like I but we do track everything he does and on that regulatory buet I always make a joke with Richard that the reason I have my job is because of him because cap one is the one that kind of dissected the credit card business cap 1 started to beat the hell out of first USA first USA.

Which had brought by bank one collapsed and it you know called into credibility the management and they hired me so Richard is why I'm here it all goes full circle

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