A struggle by investors to predict President Donald Trump’s mercurial policies set trading records at Wall Street banks in the first quarter. But as industry leaders looked ahead, they had no great answers and scant optimism for what’s to come.
Variations of “uncertainty,” “unknowns” and “turbulence” arose again and again as three of the biggest US banks kicked off the industry’s earnings reports on Friday. It’s not just the economy that’s murky and unpredictable, JPMorgan Chase & Co.’s Jamie Dimon said on a conference call. There are more significant questions about whether Western economic and military alliances remain intact.
His bank, the nation’s largest lender, surprised analysts by stockpiling $973 million for soured loans — over 40% more than they had estimated. The firm is sitting atop more capital than required and has plenty of liquidity “to get through whatever the stormy seas are,” Dimon said.
“Maybe when we do this call next quarter, we won’t be guessing,” he said.
The trio of lenders — JPMorgan, Wells Fargo & Co. and Morgan Stanley — each beat earnings estimates before describing the nervous behavior of consumers and corporations. All three stocks jumped in early trading only for those gains to fade or turn to losses once markets opened.
Trump’s chaotic tariff announcements and efforts to shrink or shutter government agencies — aimed at unleashing US growth — have stoked concerns about trade, inflation, unemployment and a potential recession. Companies are pausing expansion, including lucrative mergers and acquisitions handled by Wall Street dealmakers, bank executives said.
“Anecdotally, a lot of people are not doing things because of this. They’re going to wait and see,” Dimon said. “And that’s M&A, that’s M&A with middle-market companies, that’s people’s hiring plans.”
Should international US companies — such as JPMorgan — be concerned about getting caught in the middle of a trade war, analyst Mike Mayo asked Dimon.
“We will be in the crosshairs,” the CEO acknowledged. “That’s what’s going to happen. And it’s OK.”
Wells Fargo CEO Charlie Scharf said the San Francisco-based bank supports the administration’s effort to challenge barriers to free trade, but noted that’s fueling risks for companies.
“Timely resolution, which benefits the US, would be good for businesses, consumers and the markets,” Scharf said, noting that his firm is “prepared for a slower economic environment in 2025.”
For the moment, consumers are sticking to their habits — though some are accelerating certain purchases before the anticipated impact of tariffs, executives said.
“If the labor market remains very strong, consumer credit will probably be fine,” JPMorgan finance chief Jeremy Barnum said. “If it doesn’t, then you’re going to see it play through the way it always does.”
Analysts pressed some executives about recent bond-market volatility, which contributed to Trump’s decision to put many tariffs on pause for 90 days of negotiation. As Barnum said that the bank is, of course, watching that closely, Dimon chimed in: “Every minute.”
Stock, bond and currency markets show investors are changing their assessments of the economy’s future around the clock, Morgan Stanley CEO Ted Pick told analysts.
“We’ve been talking for the last three years about the end of history, which is to say the end of an extended period of political and economic alignment toward globalization,” he said. “History now resumes. And with that comes an adjustment period where the outlook is necessarily less predictable.”
Written by: Katherine Doherty — With assistance from Hannah Levitt and Yizhu Wang @Bloomberg
The post “‘Stormy Seas’: Jamie Dimon Sums Up Banks’ Gloomy Global Outlook” first appeared on Bloomberg