Good morning to everyone except the fast approaching debt ceiling. Phil Rosen here.
Over the past week, the so-called ‘X date’ for a US default has commandeered conversation and headlines, with warnings coming from Janet Yellen, Goldman Sachs and top CEOs.
But on Thursday, the man with the most gravity on Wall Street shared his views on the potentially catastrophic scenario that is only weeks away.
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1. Everyone pays attention when Jamie Dimon speaks. And yesterday he said there was a risk of widespread panic if lawmakers did not pull together and strike a debt deal.
This panic “affects contracts, guarantees, clearing houses, customers”, according to the CEO of JPMorgan, who is now the only major bank chief who was there in 2008 and is still in the game today.
In an interview with Bloomberg, Dimon said he had set up a “war room” at JPMorgan to plan for contingencies around a potential US default.
He said his team currently meets once a week, but could soon meet up to three times a day if people in Washington continue to drag their feet on negotiations.
While Dimon does not anticipate the country will actually see its very first default, he acknowledged that time is running out.
“The closer you get to it, the more you’ll panic,” he said. “Markets will become volatile, maybe the stock market will go down, Treasury markets will have their own problems.”
Dimon, whose bank bought the assets of the bankrupt First Republic earlier this month, said things should never happen this way and any turmoil in America impacts markets around the world .
With regard to the banking crisis, Dimon said it’s time for regulators to end the chaos – but he still predicts policymakers will learn the wrong lessons in the future.
“I think it’s going to get worse for the banks,” he said. “More regulations, more rules and more requirements. If you overdo some rules, requirements, regulations – some of these community banks tell me they have more compliance officers than loan officers.”
Not only should bank executives be blamed, but regulators should also look in the mirror, according to Dimon.
Here’s how he said it:
“I think there has to be some humility on the part of regulators. They should look at it and say, ‘OK, we were kind of part of the problem’ instead of just pointing fingers.”
What do you think of the latest comments from the boss of JPMorgan? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.
In other news:
2. U.S. stock futures rise early Friday, as investors await the release of preliminary consumer sentiment data, due out later this morning. Meanwhile, Tesla shares rose after Elon Musk announced he had found a new Twitter CEO. For the latest market moves, click here.
3. Earnings on deck: Allianz, Olympus Corp., and many others all report.
4. A hedge fund manager explained how he leverages GPT-4 to inform his best stock picks. He said it’s not about one or two prompts, but more about how you navigate each prompt with follow-up questions. Here are six takeaways from his AI experiences.
5. A Zillow economist said home sales could plummet 23% if the US defaults. The so-called “X-date” is approaching the debt ceiling, and the housing market will feel the burn if no resolution is found. The unprecedented event would cause a “major negative shock” and a “deep freeze” for housing.
6. Fundstrat’s Tom Lee said the bullish case for stocks is alive and well. Parts of the economy are experiencing “outright deflation”, he explained – and that could lead to a sharp drop in prices that will boost stocks.
7. The South African currency is near a record high. The United States has just accused the country of secretly selling weapons to Russia, with a US ambassador saying “we don’t consider this problem solved”. Get all the details.
8. What credit crunch? Credit Suisse’s chief US economist told us why fears of a severe lending pullback are overblown. Additionally, he explained why the US economy is well positioned to avoid a recession.
9. Personal finance expert “The Budgetnista” shared the two financial mistakes that keep people from building wealth. She explained how you can determine if you are on the right track.
10. Microsoft is the stock to buy because it’s leading the charge in the AI ​​arms race. That’s according to Wedbush, who said the tech giant’s early move to OpenAI and ChatGPT gave it an edge over Alphabet.
Organized by Phil Rosen in New York. Feedback or tips? Tweeter @philrosenn or email prosen@insider.com.
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.
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