My Lunch With Jamie Dimon, CEO of J.P. Morgan
“It’s not a Republican thing… It’s not a Democrat thing… It’s simply the right thing to do!“
That’s what Jamie Dimon, CEO of J.P. Morgan Chase (JPM) and a member of President Trump’s business advisory council, had to say at our closed door lunch this week in Miami.
It was a lively conversation touching on everything from politics to the U.S. economy, to interest rates, inflation, the stock market, technology, cryptocurrency, and even Jamie’s bout with cancer nearly four years ago.
So today, I’m going to bring you into this exclusive meeting and fill you in on what America’s most powerful banker had to say about all of these exciting and important issues…
On Trump’s Tax Cut and Economic Policies
“We got a new tax bill for this year… Are you happy about that?”
James Casey, the Head of Debt Capital Markets for J.P. Morgan asked the question over the clink of silverware on plates as lunch was served.
“Yeah I am!!” laughed Jamie.
“How can you keep a straight face and tell me that we should have an uncompetitive corporate tax rate here in the U.S.?”
I liked that quote so much I had to send a lunchtime tweet to fill you in. But apparently I can’t eat and tweet at the same time, so there was a bit of a typo. Apologies…
Jamie went on to talk about how cutting the tax rate on corporations is “simply the right thing to do.”
Today, companies are already bringing business back to the United States. They’re hiring more workers — and creating good jobs. They’re increasing wages, investing in new facilities, paying larger dividends to shareholders, buying back shares of stock and telling investors to expect higher earnings.
The tax cut is doing exactly what it’s supposed to be doing. And America is all the better for it.
On The Strength of the U.S. Economy
“The economy is far better than we were expecting last year,” Jamie said as I cut into my steak salad.
I nodded my head in agreement… After all, I was at this same conference last year and I can tell you that the mood among investors and the management teams they came to see is significantly more positive than it was in 2017.
“The U.S. economy could easily grow three percent this year.”
Jamie went on to talk about how tax reform is leading to strong growth. And at the same time, international growth is improving quite a bit as well.
There is a lot of potential for more upside surprises in the U.S. So even though investors are optimistic right now, there’s plenty of room for new unexpected opportunities.
On the risk side of the equation, there aren’t nearly as many potholes to worry about. Banks are far less aggressive and leveraged than they were during the last bull market and households are in better shape than before with far less debt.
The overall economic recovery has taken a long time, but stocks haven’t moved so much higher that we have to worry about a major pullback. In fact, the long recovery actually makes sense as the economy is getting back to normal after a really challenging financial crisis ten years ago.
On Interest Rates and Inflation
It’s no secret that the fear of inflation was a big part of the market’s pullback earlier this month. When asked about his thoughts on higher inflation, Jamie asked us to think about “why” inflation is moving higher.
Of course, the biggest piece of inflation data that caught investor eyes this month was the rise in wages. Other inflation data is coming from areas of the economy that are expanding and improving.
“If inflation and interest rates are moving higher because of growth, that’s a good ‘why,'” Jamie said.
“I think the economy is stronger than we’re giving it credit for,” Jamie went on to say.
The modest inflation that we’re seeing is the result of good things happening. Jobs are not only abundant, but they’re paying better wages.
And as technology and automation continues to advance, we’ll see the average job getting better and better. That’s because the lower-end jobs will often be replaced by automation.
Of course, there is a great need for education so that workers can find better ways to contribute and earn a better living. And that’s something we need intense focus on here in the United States.
Personal Thoughts on Cancer and Health Care
Four years ago, Jamie was diagnosed with throat cancer. He went through intense treatment and is now healthy and in great shape. But the process of getting better was challenging on many fronts.
“When I was in treatment, I still went to work as much as possible. After all, I like the people I work with. I’m passionate about what we do here at J.P. Morgan… You need to live your life deliberately.”
During the time Jamie was recovering, he said that he had a hard time figuring out the nuts and bolts behind the medical costs he was charged.
“I couldn’t understand the bills — what was going where. And when that happens to me, I automatically get concerned that I’m getting ripped off.”
Jamie’s battle with cancer and his first-hand experience with a convoluted health care system is at least part of what drove him to team up with Amazon.com’s (AMZN) Jeff Bezos and Berkshire Hathaway’s (BRK.A) Warren Buffett to design a new system for health care insurance.
This new project will be a very interesting one to follow. I’m personally excited to see what kind of new approach these businessmen come up with. And hopefully in the next few years Americans will have more options — and better options — when it comes to paying for healthcare expenses.
On Cryptocurrencies and Blockchain
“Jamie, you’ve gone on record as very skeptical — even a non-believer — in Bitcoin. Have your thoughts changed now that Bitcoin has lost half its value?”
The question triggered laughter around the table.
“I rest my case!” said Jamie with a smile.
“Listen, blockchain technology is real. Moving money with blockchain is real.”
“J.P. Morgan moves $5-6 trillion a day around the world. Those transactions need to be secure, safe and cheap, so blockchain can help with this.”
“But Bitcoin is pure speculation.”
On the Federal Deficit and the U.S. Budget
“Look, we can handle a higher deficit right now. The additional spending over the next few years is just a drop in the bucket.”
“The big issue in America is entitlements… Medicare and Medicaid… Payments are set to balloon and that’s a big problem!”
“If we fix this in the long run, it will help with the budget deficits. If not, we’re in trouble either way.”
I’m not sure I totally agree with Jamie here. I think our overall budget is still important and I’m concerned by the growing debt in the U.S.
But at the same time, I’m encouraged by the strength in the overall economy and how that’s leading to growth, a higher standard of living for Americans, and a stronger country in general.
Time for me to head back into the conference and see what other wealth-building opportunities I can find!
Here’s to growing and protecting your wealth!