WHEN: TODAY, WEDNESDAY, January 20, 2016
WHERE: CNBC'S "SQUAWK ON THE STREET"
Following is the unofficial transcript of a CNBC interview with JPMorgan Chase Chairman & CEO Jamie Dimon live from DAVOS today. Following are links to video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000485394, http://video.cnbc.com/gallery/?video=3000485391 and http://video.cnbc.com/gallery/?video=3000485393.
All references must be sourced to CNBC.
SORKIN: THANK YOU, CARL. WE ARE LIVE IN DAVOS, SWITZERLAND AT THE WORLD ECONOMIC FORM. AND JAMIE DIMON THE CEO OF JPMORGAN IS HERE AND WE ARE THRILLED TO HAVE YOU. WE HAD A NUMBER OF DISCUSSIONS THIS MORNING ON THIS VERY SET WITH STEVE SWARTZMAN, WITH RAY DALIO, SCOTT MINERD I COULD GO ON AND VIRTUALLY EVERY ONE OF THEM HAD A VERY SORT OF PESSIMISTIC TONE ABOUT THE GLOBAL ECONOMY AND WHERE THIS IS ALL GOING. SO I THOUGHT WE WOULD START BY TRYING TO GET A SENSE OF WHERE YOU ARE.
DIMON: FIRST, WELCOME, EVERYBODY. THAT'S WHAT MAKES MARKETS, PEOPLE DON'T AGREE. THEY BUY AND SELL AND DO DIFFERENT THINGS. WHEN MARKETS ARE THIS BAD, IT'S REASONABLE TO SAY IT MIGHT BE TELLING YOU SOMETHING, BUT ALSO REASONABLE TO SAY MAYBE IT'S NOT. SOMEONE SAYS MARKETS HAVE FORECASTED 9 OF THE LAST 5 RECESSIONS. MY OWN VIEW IS YOU HAD FOUR, FIVE THINGS VERY DIFFERENT TAKING PLACE. CHINA SCARED PEOPLE WITH THIS BUNGLING OF THEIR CURRENCY AND THEIR STOCK MARKET. AND THEIR LOWER GROWTH THAT CHANGED FLOWS AROUND THE WORLD OF COMMODITIES. COMMODITY PRICES ARE DOWN SUBSTANTIALLY NOW. FAR MORE THAN THEY WERE EVEN A YEAR AGO. THAT HAS CAUSED IF YOU THINK ABOUT IT SOVEREIGN WEALTH FUNDS -- IT'S HELPED PEOPLE. IT'S HELPED INDIA, JAPAN, KOREA, IT'S HELPED THE AVERAGE CONSUMER WHO WE THINK IS ACTUALLY SPENDING THE MONEY. IT'S HURT PEOPLE. IT'S HURT COMMODITY PRODUCERS, SOVEREIGN WEALTH FUNDS. A LOT OF THESE BIG INVESTORS ARE NOW SELLING. CAUSING TURMOIL IN THE MARKETS DIRECTLY THROUGH THEIR SELLING. AT THE END OF THE DAY, THE ECONOMY, YOU HAVE TO SEPARATE THE FLUCTUATIONS IN THE MARKET FROM THE ACTUAL ECONOMY. AMERICA HAS BEEN ADDING 200,000 JOBS A MONTH FOR THE BETTER PART OF TWO YEARS, WE'VE GOT 12 MILLION EMPLOYEES, HOUSEHOLD FORMATION IS GROWING, CAR SALES ARE UP. WE'RE HAVING SLOW GROWTH. I WISH IT WAS MORE. CHINA, THEY HAVE THE WHEREWITHAL TO GROW AT 5%, 6%. EUROPE WILL GROW A LITTLE BIT. IT WILL BE WORSE THAN WE THOUGHT, BUT IT'S POSSIBLE I'M HOPEFUL THAT THIS IS ALL A BIG ADJUSTMENT AND IN A COUPLE WEEKS WE'LL TAKE A DEEP BREATH AND SAY THANK GOD THAT'S OVER. I ALSO SAY THAT A FAST ADJUSTMENT MIGHT BE BETTER THAN A PAINFUL, SLOW DEATH.
QUICK: I THINK WE WATCH WHAT'S HAPPENING, YOU WONDER IF THERE'S A POINT WHERE ALL OF THIS PAIN MAKES CONSUMERS FEEL LESS WEALTHY, WORRY ABOUT THINGS, MAKES CEOs LESS CONFIDENT PARTICULARLY WHEN IT IS COMING AT THE BEGINNING OF A YEAR LIKE THIS, AND IF THERE IS ALMOST A SELF FULFILLING PROPHECY OF THESE WEAK MARKETS LEADING TO LESS INVESTMENT.
DIMON: IF YOU LOOK AT THE LAST 20 GEOPOLITICAL CRISES THAT CAUSED ALL THE ACHE AND PAIN, ONLY ONE CAUSED A GLOBAL RECESSION. THAT'S EVERYTHING SINCE WORLD WAR II, INCLUDING VIETNAM, KOREA, RUSSIA SIX INVASIONS OF FOREIGN COUNTRIES ETC IF YOU LOOK AT ALL THE LAST MAJOR ECONOMIC DOWNTURNS, THE ONES I REMEMBER, '73, '80, '82, '87 MARKET CRASH, '90 REAL ESTATE CRASH, '97 THE AGE OF CURRENCY CRISIS, THE 2001 INTERNET BUBBLE. THE ONLY ONE WHERE THE MARKET CHANGED THE ECONOMY WAS IN '08. ALL THE OTHERS MORE THE ECONOMY WAS REACTING TO CONSUMER SPENDING THE MARKETS WENT DOWN, BUT IT WAS REALLY THE OTHER WAY AROUND. SO YES I THINK THERE IS A WEALTH EFFECT I JUST WOULDN'T OVERDUE IT
KERNEN: WE COULD BE LUCKY, IT COULD BE THAT CHINA'S STOCK MARKET IS NOT CHINA'S ECONOMY, AND OIL THIS TIME MAY NOT BE TELEGRAPHING A GLOBAL SLOWDOWN, IT MAY REALLY BE HORIZONTAL DRILLING AND SUPPLY WHICH IN THE END WOULD BE A GOOD THING.
DIMON: THE STRUCTURE OF THE OIL MARKETS IS COMPLETELY DIFFERENT BECAUSE OF SHALE OIL. THE CONSUMER HAS A LOT MORE MONEY IN THEIR POCKET. THIS ISSUE ABOUT ARE THEY SPENDING IT? JPMORGAN CHASE INSTITUTE, WE ACTUALLY LOOK AT DATA OF REAL ACCOUNTS, REAL SPENDING, DEBIT CARDS, CREDIT CARDS, PEOPLE WRITING CHECKS, IT LOOKS LIKE THEY'RE GETTING THE MONEY, WE SEE THEM SAVING MORE MONEY SPENDING LESS MONEY ON GAS, SPENDING ALMOST 80% OF IT ON T & E AND A BUNCH OF OTHER THINGS IT IS HARD TO FIGURE THIS ONE OUT, LARGER TICKET ITEMS LIKE BIGGER CARS WHICH HAVE BIGGER PAYMENTS.
KERNEN: AND E&P FIRMS GOING BANKRUPT THAT'S NOT SYSTEMIC ENOUGH TO CAUSE PROBLEMS--
DIMON: NOT IT JUST CHANGES THE CASH FLOWS, CAPITAL EXPENDITURES.
KERNEN: BANKS WILL INCUR LOSS BASED ON LOANS TO THE ENERGY. I WORRY ABOUT SOLAR, WIND, $27 OIL.
DIMON: WHATEVER YOU DO DON'T WORRY ABOUT JPMORGAN CHASE. WE ARE THE ROCK OF GIBRALTAR. REMEMBER BANKS ARE USUALLY SENIOR IN THE STRUCTURE. THEY HAVE ASSET BACKED LOANS THEY'RE NOT JUST UNSECURED LOANS TO, THEY'RE NOT LIKE HIGH YIELD LOANS TO E&P COMPANIES SO WE HAVE ALREADY TOLD THE WORLD, IF OIL STAYS AT $30 FOR 18 MONTHS, WE'LL HAVE TO PUT UP ANOTHER 750 MILLION DOLLARS IN RESERVES. AND THAT'S OK IT IS NOT GOING TO DENT ANYTHING THAT WE ARE DOING
SORKIN: WHAT IS YOUR PREDICTION FOR WHERE OIL GOES? GIVEN YOU DID DOUBLE YOUR LOAN LOSS PROVISION IN Q4.
DIMON: IF I COULD I WOULD HAVE DONE MORE BUT ACCOUNTING RULES ARE WHAT THEY ARE THAT WE COULDN'T BUT IF I COULD HAVE PUT UP ANOTHER 300, 400 MILLION, I DON'T KNOW. THE FORWARD CURVE OF OIL HAS OIL TRADING AT $40 AT THE END OF THE YEAR. I WOULD SAY THAT'S THE BEST GUESS RIGHT THERE, BUT I'LL LEAVE THAT TO THE OIL EXPERTS. COMMODITY PRICES, CHICKEN, CORN, COTTON, LUMBER, SOYBEAN, YOU NAME IT, INTEREST RATES, STOCKS, THEY ALL FLUCTUATE. WHEN THEY FLUCTUATE WE ALL TRY TO FIGURE OUT WHAT CAUSED THAT THE MISBALANCE IN SUPPLY AND DEMAND IN OIL WAS NOT EVEN 2%. AND SO COMMODITY PRICE COULD BE VERY, VERY VOLATILE BASED UPON THAT. THIS WILL CHANGE. YOU SEE A HUGE RIG COUNT COMING DOWN, BIG FUTURE PROGRAMS ARE BEING CANCELED BUT IT HAS NOT STOPPED SHORT-TERM OIL. SO WE WILL SEE HOW IT SORTS OUT.
SORKIN: ONE OF THE OTHER FEATURE SETS OF THE OIL ISSUE THOUGH IS WHAT'S HAPPENING IN THE MIDDLE EAST, SAUDI ARABIA. SAUDI ARAMCO IS PLANNING TO GO PUBLIC. WILL YOU BE UNDERWRITING THAT.
DIMON: I CANNOT TALK ABOUT THAT.
QUICK: JAMIE WE KNOW WE ARE LOOKING AT AN INDUSTRIAL RECESSION AT THIS POINT THERE HAVE BEEN A LOT OF QUESTIONS ABOUT WHETHER THAT BLEEDS OVER. WE ARE STILL TWO-THIRDS A CONSUMER DRIVEN ECONOMY, YOU HAVE A REALLY GOOD IDEA OF WHAT'S HAPPENING FROM CREDIT CARDS, FROM WHAT YOU'RE SEEING IN MORTGAGES. IS THERE ANYTHING THAT TELLS YOU THIS IS BLEEDING OVER IN THE MOST RECENT NUMBERS
DIMON: WHEN YOU SAY INDUSTRIAL, MANUFACTURING IS DOWN, 12% OF THE ECONOMY. I WAS SPEAKING TO A BUNCH OF CEOs HERE. ALMOST ALL OF THEM SAY I'M DOING OKAY. THESE ARE ELECTRICAL PEOPLE, COMMODITY RELATED PEOPLE. NOT OIL, BUT -- I THINK MORE PEOPLE ARE OKAY. THEY DON'T SEE THIS COLLAPSE THAT PEOPLE ARE TALKING ABOUT.
QUICK: WHY ARE CEOs SO NERVOUS, THINKING EVERYBODY ELSE IS IN WORSE SHAPE THAN THEY ARE?
DIMON: AS A CEO, IF YOU'RE NOT NERVOUS, YOU'RE CRAZY. YOU SHOULD ALWAYS BE A LITTLE WORRIED ABOUT SOMETHING. THE BULLET THAT WILL GET YOU IS COMING FROM SOMEWHERE, BUT YOU DON'T NECESSARILY KNOW WHERE. IT'S NATURAL HAVING LOOK OUT AND FIGURE OUT WHAT THAT IS.
KERNEN: I HAVE JAMIE DIMON MOMENTS IN THE PAST THAT ARE SOME OF MY FAVORITES.
DIMON: I HAVE SOME JOE MOMENTS IN THE PAST.
KERNEN: MUTUAL. I'M BARELY A DEMOCRAT WAS A GREAT ONE. ANOTHER ONE WHERE YOU TOOK SHOTS AT THE GOVERNMENT. I SEE YOU --
DIMON: I LEARNED NOT TO TAKE SHOTS AT THE GOVERNMENT BECAUSE THEY SHOOT BACK.
KERNEN: RIGHT. AND YOU CAN'T FIGHT CITY HALL. THAT'S WHAT I LOVE ABOUT YOU. USUALLY YOU SAY IT FIRST AND ASK FOR FORGIVENESS LATER. POLITICALLY IT'S KIND OF A -- IT'S DOWN IN THE -- WHAT HOLE IS THAT? THE ALICE IN WONDERLAND? IT'S WEIRD NOW WITH THE ANGER
DIMON: I THINK IT'S CAUSING A BIT OF A MARKETPLACE, GEOPOLITICAL --
KERNEN: DON'T YOU THINK?
DIMON: GLOBALLY THERE IS POPULISM AND THINGS LIKE THAT. WHAT I WOULD HOPE PEOPLE WOULD DO IS NOT BE KNEE-JERK ANYTHING, KNEE JERK DEMOCRAT OR REPUBLICAN. READ AND LISTEN TO OTHER PEOPLE. A LOT OF SMART PEROPLE AND A LOT OF SMART IDEAS ON THE OTHER SIDE. ALMOST NO ISSUE IS BINARY. IF YOU LOOK AT GOVERNMENTS THAT ARE SUCCESSFUL, IT'S ALMOST ALWAYS IN COLLABORATION WITH BUSINESSES, BUSINESSES HAVE TO COLLABORATE WITH GOVERNMENT IN CIVIC SOCIETY. THAT'S WHAT WE SHOULD BE DOING. IF WE MAKE IT JUST DEMOCRAT, REPUBLICAN, LEFT, RIGHT, YOU WILL NEVER GET THERE.
KERNEN: I CAN GIVE YOU THREE NAMES ON ONE SIDE IF YOU WANTED TO GET IN, AND PROBABLY ONLY TWO TO TALK ABOUT ON THE OTHER SIDE, SOME PEOPLE THINK, I DON'T KNOW IF I WOULD CALL IT SLIM PICKINGS, BUT NOT EVERYBODY IS ENTHRALLED WITH THE POSSIBLE CHOICES. THAT MUST BE A TERRIBLE JOB IN A COUNTRY LIKE THIS THAT'S THE BEST WE CAN DO.
DIMON: I THINK BEING PRESIDENT IS A VERY TOUGH JOB. AND WE'VE MADE IT WORSE THAT, YOU KNOW, HOW MANY PEOPLE WON'T RUN BECAUSE OF WHAT THEY HAVE TO GO THROUGH TO GET ELECTED. SO WE HAVE MADE IT WORSE AND I THINK HOPEFULLY CONGRESS WILL GET AROUND TO FIXING THAT TOO. THAT IS, YOU KNOW, I TALK TO A LOT OF PEOPLE WHO SAY THEY WOULD NEVER RUN FOR OFFICE ANYMORE. AND IT USED TO BE, YOU KNOW, YOU WERE A BUSINESS PERSON, A CITIZEN. INTO OFFICE, OUT OF OFFICE. THAT'S ALMOST TOTALLY GONE. AND I THINK THAT'S A HUGE MISTAKE.
KERNEN: AND THE COUNTRY ITSELF, THOUGH, IS POLARIZED. AND ALL YOU NEED TO DO IS YOU TALK TO A REPUBLICAN ABOUT VOTING FOR BERNIE SANDERS OR TALK TO A DEMOCRAT ABOUT VOTING FOR DONALD TRUMP. AND NEITHER ONE OF THEM CAN, IN THEIR WILDEST DREAMS, FATHOM A COUNTRY HEADED BY – AND WE ALL HAVE OUR OWN, YOU KNOW, I KNOW I WHO I WOULD PREFER THERE.
DIMON: I'M NOT GOING TO – ANYTHING JUST POLITICAL IS BAIT.
KERNEN: THIS IS GOING TO BE ONE OF THOSE JAMIE DIMON MOMENTS.
DIMON: I'VE HEARD YOU GUYS HAVE SPOKEN ENOUGH ABOUT IT. I DON'T NEED TO – I CAN'T ADD TO ANY.
SORKIN: I'M GOING TO TRY ON SOMETHING COMPLETELY DIFFERENT, WHICH IS OVER THE YEARS I'VE ASKED YOU WHERE JAMIE DIMON THE INDIVIDUAL, NOT THE CEO, PUTS HIS MONEY. BESIDES THE STOCK THAT YOU HAVE IN JPMORGAN. WHAT DOES JAMIE DIMON DO RIGHT NOW?
DIMON: I'M VERY CONSISTENT. I HAVE PROBABLY SOME OF THE SAME STOCKS. I DON'T – YOU KNOW, FIRST OFF, I'M SO RESTRICTED THAT IF I BUY, I CAN ALMOST NEVER SELL. WHEN I HAVE EXTRA MONEY, I PUT IT IN A STOCK THAT I THINK IS GOING TO BE GO UP IN PRICE OVER THE NEXT 5 OR 10 YEARS. I THINK AS WARREN BUFFETT TALKS ABOUT, THE MOTE THAT'S PROTECTABLE. I LIKE HAVING A LITTLE BIT OF A DIVIDEND THAT'S NOT NECESSARY TO ME. YOU KNOW, RIGHT NOW I WOULDN'T BUY TREASURIES. YOU KNOW, I THINK IF YOU ACTUALLY ASKED ME, I MEAN, YOU KNOW, SOME CREDIT IS ACTUALLY GETTING THE PRICE RANGE, WE SHOULD START THINKING ABOUT IT. I MEAN SOME OF THE HIGH – NOT THE ENERGY SIDE, THE OTHER HIGH YIELD CREDIT IS BEING PRICED LIKE THERE IS A BAD RECESSION.
QUICK: RIGHT.
DIMON: SO UNLESS YOU THINK THERE IS GOING TO BE A BAD RECESSION – EVEN THERE, YOU MIGHT GET A SEMI-DECENT RETURN. YOUR PRINCIPAL WILL DROP FOR A WHILE, BUT –
KERNEN: TO BE WHERE YOU ARE –
DIMON: BUT I THINK BUYING GREAT LONG-TERM POSITIONS IS THE BEST THING TO DO.
QUICK: AND YOU'RE NOT GOING TO GIVE US ANY NAMES?
DIMON: NO.
KERNEN: TO BE WHERE YOU ARE, OR BLANKFEIN – I'M TALKING ABOUT RISK MANAGERS. AND THE CLASSIC THING ABOUT THE FINANCIAL CRISIS IS YOU GUYS PROBABLY – YOU AND LLOYD AND OTHERS SAW WHAT WAS COMING AND DE-RISKED IN CERTAIN WAYS WHICH MADE IT LOOK LIKE YOU'RE BETTING AGAINST THE HOUSE – I DON'T KNOW WHY YOU GET FINED FOR SOMETHING LIKE THAT. BUT YOU DE-RISK. IS THERE ANYTHING RIGHT NOW THAT YOU'VE DONE THAT YOU'VE LOOKED AT IN THE ENTIRE WORLD WHERE YOU SAY, WHOA THIS IS –
DIMON: YEAH, I THINK THE THING THAT WOULD SHOCK PEOPLE IS IF YOU ACTUALLY SAT AT A RISK COMMITTEE OF OURS, WE SPEND A LOT OF TIME MANAGING RISK, DE-RISKING, YOU KNOW, MAKING THE RISK SO IT WON'T DAMAGE THE COMPANY WHILE WE CAN SERVE THE CLIENT. THAT'S CALLED SYNDICATION, IT'S CALLED HEDGING, IT'S CALLED, YOU KNOW, LIMITING ABSOLUTE NUMBERS, IT'S CALLED STRESS TEST. YOU KNOW, WE STRESS TEST MAJOR THINGS A HUNDRED TIMES A WEEK. A HUNDRED TIMES A WEEK.
KERNEN: IF YOU TELL ME THERE'S NOTHING TO WORRY ABOUT, LIKE BACK IN '08 THERE WAS SOMETHING TO WORRY ABOUT AND I THINK YOU KNEW THAT. IS THERE NOTHING THAT YOU SEE RIGHT NOW THAT SYSTEMIC –
DIMON: THE THING THAT WORRIES ME THE MOST HONESTLY IS BADLY DESIGNED PUBLIC POLICY THAT HAS ADVERSE CONSEQUENCES THAT REALLY HURT US. THAT COULD COME OUT OF – I THINK A BREXIT COULD HAVE CONSEQUENCES WE DON'T COMPLETELY UNDERSTAND TODAY, IT'S NOT GOING TO AFFECT THE ECONOMY IN THE NEXT SIX MONTHS OR AT LEAST NOT VERY MUCH. SO THERE'S A COUPLE THING LIKE THAT I LOOK AT. GEOPOLITICS ALWAYS HAS THE RISK OF EXPANDING. THE WAY WE LOOK AT RISK IS EVERYTHING WE DO, NO MATTER WHAT HAPPENS, WE'RE OKAY. WE COULD BE DEAD WRONG, AND WE'RE OKAY. AND WE LOOK AT THAT ON SINGLE NAME CREDITS, COUNTRY WIDE CREDITS, TRADING POSITIONS, ETC. WHILE TRYING TO SERVE THE CLIENT. SO LIKE IN THE OIL PATCH, I WANT TO GO TO HOUSTON IN A YEAR OR TWO, AND WALK IN A ROOM AND TALK TO SOME OF THE OIL FOLKS AND HAVE THEM SAY TO ME, JAMIE – YOU KNOW, INSTEAD OF SAYING YOU GUYS CUT AND RAN WHEN THINGS GOT TOUGH, YOU DIDN'T HELP US, YOU DIDN'T DO ANYTHING – INSTEAD SAY YOU GUYS WERE HERE IN GOOD TIMES AND BAD TIMES. WE ARE THERE IN GOOD TIMES AND BAD TIMES FOR OUR CLIENTS. AND THAT INCLUDES COUNTRIES, SOVERIGN WEALTH FUNDS, CENTRAL BANKS. YOU KNOW, AS OPPOSED TO – AND IF WE LOSE A LITTLE EXTRA MONEY DOING THAT, SO BE IT. THAT DOES NOT WORRY ME AT ALL. WE'RE GOING TO BE THERE IN GOOD TIMES AND BAD TIMES. AND WE'VE BEEN IN – I THINK WE'RE GOING TO HAVE OUR 75th ANNIVERSARY IN HOUSTON COMING UP THAT I'M GOING TO.
KERNEN: IS THE RIGHT MOVE FOR THE FED TO GO FOUR THIS YEAR OR TO NOT GO?
DIMON: THE FED – LOOK, I'VE ALWAYS SAID THAT I THINK I PERSONALLY BELIEVE NORMALIZATION IS A GOOD THING. I DON'T BELIEVE THAT RAISING INTEREST RATES 25 BASIS POINTS IS TIGHTENING IT ALL. IN FACT, WE LOOK AT TECHNICALLY IS THERE TIGHTENING BY TAKING RESERVES OUT OF A SYSTEM? NOT REALLY. SO I THINK THE FIRST 25, 50 OR 75 DOESN'T HAVE THIS TIGHTENING EFFECT. AS LONG AS THE AMERICAN ECONOMY IS STRONG, THEY SHOULD RAISE IT A LITTLE BIT MORE.
KERNEN: DO YOU THINK THEY WILL?
QUICK: EVEN IF THE DOLLAR –
DIMON: I DON'T KNOW.
KERNEN: THEY MIGHT NOT DO IT NOW BASED ON –
DIMON: YEAH, BUT YOU KNOW WHAT? THINGS CALM DOWN. EMPLOYMENT KEEPS ON GOING UP, INFLATION – REMEMBER, INFLATION HAS SHORT-TERM THINGS AND LONG-TERM. LET THEM MAKE THE DECISION BASED ON THE FACTS AT THE TIME. I THINK THAT YOU CAN'T MAKE CERTAINTY AROUND SOMETHING THAT IS NOT CERTAIN. I THINK THAT FORECASTING INTEREST RATES IS REALLY HARD TO DO AND THAT THEY SHOULD JUST REACT TO THE EVENTS. I POINT OUT IN SOME – MOST OF YOU ARE NOT OLD ENOUGH TO KNOW THIS – I REMEMBER, I THINK THIS IS RIGHT, WHEN PAUL VOLCKER RAISED INTEREST RATES 200 BASIS POINTS IN ONE SHOT ON A SUNDAY NIGHT. THERE WAS NO PREPARING PEOPLE FOR IT. THERE WAS NO – YOU KNOW, AND HE KIND OF KNEW WHAT HE WAS DOING. SO YOU KNOW, I THINK WE'RE GETTING TOO FINE TUNED ABOUT WHAT THE FED IS GOING TO DO. IF THEY RAISE IT, IT SHOULD BE A GOOD SIGN.
SORKIN: RAY DALIO HAS SAID THE OPPOSITE. HE ACTUALLY THINKS THERE'S A POSSIBILITY THAT WE REVERT BACK TO QE.
DIMON: I KNOW WHAT RAY IS SAYING, AND I THINK RAY'S VERY SMART, AND BELIEVE ME, I PAY A LOT OF ATTENTION TO WHAT HE SAYS. BUT I STILL THINK THE ECONOMY IS CHUGGING ALONG. AND AS LONG AS IT'S CHUGGING ALONG, YOU ARE GOING TO SEE ANOTHER RATE INCREASE THIS YEAR.
QUICK: WHY DO YOU THINK THE TEN-YEAR IS BELOW –
DIMON: BY THE WAY, IF WE GO INTO RECESSION, YEAH, I THINK HE'S RIGHT. THEY'LL DO SOMETHING LIKE A QE. I'M NOT SURE REDUCING RATES IS AS EFFECTIVE AS QE. AGAIN, I THINK ZERO RATES HAVE A HUGE UNINTENDED CONSEQUENCE WE SHOULD BE VERY CAREFUL ABOUT.
QUICK: JAMIE, DOES THE TEN-YEAR BELOW 2% SIGNAL ANYTHING TO YOU?
DIMON: YEAH. YOU KNOW, THE TEN-YEAR IS BOTH A RISK OFF TRADE, OK? BUT YOU ALSO HAVE A LOT OF PEOPLE SELLING IT. SO THE TWO BIGGEST BUYERS OF THE TEN-YEAR IN THE PAST WERE FOREIGN EXCHANGE MANAGERS AND THE U.S. CENTRAL BANK. AND IN SOME PART THE BANKS TO MEET LIQUIDITY REQUIREMENTS. ALL THREE OF THOSE HAVE STOPPED OR REVERSED. YET YOU WOULD SAY TREASURIES SHOULD HAVE GOTTEN WORSE, THEY'VE GOTTEN BETTER AS A RISK TRADE. I THINK IF PEOPLE – ONCE THAT HAPPENS AGAIN, I WOULD EXPECT THEY'LL GO BACK TO WHERE THEY WERE IF PEOPLE BECOME COMFORTABLE THAT WE'RE NOT HEADING INTO SOME KIND OF GLOBAL RECESSION.
SORKIN: HOW DO YOU LOOK AT THE AUTO MARKET RIGHT NOW AND SPECIFICALLY AUTO LOANS? PEOPLE HAVE WORRIED ABOUT THAT SPACE FOR A VERY LONG TIME NOW.
DIMON: THE AUTO LOANS – FIRSTLY –
SORKIN: THAT THEY HAVE BEEN PULLED FORWARD –
DIMON: THEY PERFORM BETTER THAN ANY CLASS IN '08 AND '09. JUST KEEP THAT IN MIND. SO IT'S GETTING STRETCHED. PEOPLE ARE GOING TO SEVEN YEARS. I THINK IT IS GETTING STRETCHED, BUT IF YOU'RE VERY CAREFUL IN HOW YOU UNDERWRITE BOTH THE PERSON, THE CAR – IF IT'S A LEASE, THE LEASE RESIDUAL, YOU'RE GOING TO BE OKAY. AUTO LOANS ARE, I THINK, A TRILLION DOLLARS. YOU KNOW, MORTGAGES ARE 10 TRILLION. SO JUST KEEP IT IN PERSPECTIVE WHEN YOU TALK ABOUT IF IT HAS ANY SYSTEMIC EFFECT.
SORKIN: RIGHT. TWO OTHER QUICKIES. ONE IS ON ELECTRONIC CURRENCY. WE HAD GLENN HUTCHINS ON, WE HAD THE CEO OF PAYPAL ON. I REMEMBER WHEN WE HAD A CONVERSATION MAYBE TWO OR THREE YEARS AGO HERE, I ASKED YOU ABOUT BITCOIN THEN. AND YOU TOLD ME IT WAS GOING NOWHERE FAST. NOW IT SEEMS TO BE REEMERGING POTENTIALLY.
DIMON: NO. I THINK TWO THINGS. THERE'S BITCOIN, THE CURRENCY, I THINK IS GOING TO GO NOWHERE. AND THAT'S NOT BECAUSE OF ANYTHING TO DO WITH TECHNOLOGY. GOVERNMENTS, WHEN THEY FORM THEMSELVES, FORM THEIR CURRENCY. GOVERNMENTS LIKE TO CONTROL CURRENCY, KNOW WHERE IT GOES AND WHO IT GOES TO AND CONTROL IT FOR MONETARY PURPOSES. THERE IS NOTHING BEHIND A BITCOIN. AND I THINK IF IT WAS BIG, THE GOVERNMENTS WOULD STOP IT. I MEAN, THAT'S MY OWN PERSONAL BELIEF. I MAY BE DEAD WRONG. THE BLOT CHAIN IS A TECHNOLOGY, WHICH WE HAVE BEEN STUDYING, AS OF – I'M SURE YOU'VE HAD OTHER PEOPLE UP HERE — AND YES, IT'S REAL. IT COULD PROBABLY REDUCE THE COSTS OF REAL APPLICATION IN CERTAIN THINGS. IT'S KEEPING A SINGLE FILE AS OPPOSED TO WE ALL KEEP OUR OWN FILES. IT HAS CERTAIN SECURITY MEASURES. IF IT PROVES TO BE CHEAP AND SECURE, IT WOULD BE ADOPTED FOR A WHOLE BUNCH OF STUFF. NOT FOR EVERYTHING. IT'S NOT USABLE IN CERTAIN TYPES OF THINGS.
SORKIN: ARE YOU SURPRISED BY THE LACK OF ADOPTION OF THINGS LIKE APPLE PAY AND ANDROID PAY AND SOME OF THESE SERVICES WHICH YOU HAVE JUMPED INTO?
DIMON: NO. NO, APPLE PAY – NO THEY ARE GOING TO BE ADOPTED MORE, BUT ONLY SO MANY PEOPLE HAVE NFC. AND AS THESE MERCHANTS PUT IN MORE AND MORE NFC, AND CUSTOMERS GET MORE AND MORE USED TO IT, I THINK YOU ARE GOING TO SEE MORE OF THESE THINGS GET USED. AND WE SEE IT GOING UP. YOU KNOW, IT JUST ISN'T A HOCKEY STICK LIKE THIS, BUT AGAIN, A LOT OF PEOPLE JUST DON'T HAVE IT.
SORKIN: OK. JAMIE DIMON, THANK YOU.
DIMON: THANKS. THANK YOU VERY MUCH.
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