Transcription
Mr. Diamond, thank you for having us. Thank you for being our host here in Paris. I mean, there's a lot riding. The markets are optimistic. You're optimistic that there's some kind of resolution in the Middle East. Are they overlooking the worries about inflation?
Yeah, it's a really a welcome. I'm happy to be here. I think is a little bit too much exuberance out there. It's not just the Middle East. It's, you know, Ukraine, Russia still there, America, China through a lot of these complex issues, which maybe not quite the market, but the issues like inflation. You know, the today's paper was so good. But yeah, I think the market is kind of exuberant and it may not be completely justified.
So why are they so exuberant if they're exuberant, are you expecting a correction? And is it because they're looking at a high? No, I don't think it's I think corporate probably doing very well. Hey, I will be a plus though this year it's just a lot more spending, which may be a little inflationary too. Uh, but it's more about quarter profits and we could do a little bit more QE. Government still spend a lot of money. The one big beautiful bill is kicking in stimulus offsetting a lot of the uh, uh, the the I think the gas increase the dollar gas is $100 billion. The big one big real close 100 billion consumers. One big group built. 300 billion. Uh, deregulation is real. Who are these leaders? Of course. You know, pretty good market right now.
But when you talk about exuberance, it means that there's a market dislocation. Where do you see that in the stock markets in the top 1,015% credit spreads are very low. The general assumption that things that this is all the result. I'm just not kind of a skeptic. I don't know. I hope they do, but I don't know that they will.
Okay. What did chief executives worry about in private that they tell you that they won't tell us? Not much. It's trade on your America, NATO, on the wars, oil prices. I mean, the same stuff you hear about all the time. But CapEx, I know, you know, we had a great earnings season. Yeah. Is the next one going to be less good? I don't know yet. It's very hard to tell. Um, you know, I think the deficit spending drives a lot of drives a lot of corporate earnings too. So we and drives a lot of CapEx and your own capacity. Productivity before creates inflation. I don't know that. I think one of the risks is inflation. I've always thought that.
But also how do you think of oil and how do you think about what's happening in the Middle East at this last three weeks, weeks, even like two months? Are we going to be in trouble? It's a big deal. And every day it gets a little bit worse. I don't know how you resolve it. Hope it gets resolved. In the interest of the United States and against the Iranian regime and not the Iranian people. But I don't know. But I read something very interesting that China reduced demand by 5 billion by 5 million barrels a day. America increases exports by 3 billion barrels a day. That 8 million is made for a lot of those lost. And that which is maybe why hasn't been a severe thing. On the other hand, inventories are coming down. You know, we I guess wells we have to be close and stuff like that. So it gets gets a little more serious every day. That day becomes a disaster. Has been pushed down quite further than we thought at the beginning.
Do you worry about the U.S. consumer? Are you are you seeing signs stressing? No. I think the offer in the top 50%. Lots of money, jobs, wages going up. Home price going up, doc. Productive spending. Like they should know. Like the buying or traveling. The bottom 30%. If I'm going to save struggling a little bit, not a massive downturn, then of course we'd like to help it. But their wages have not gone up. But more important that they do have jobs and they don't have too much debt. They still have jobs. And that, you know, today was going to drive consumer spending, consumer sentiment, that part of corporate profits will be jobs.
What do you worry about? I know there's also the president's meeting with President XI, uh, tomorrow in Beijing. I mean, does that have implications for the trajectory of America? Okay. I, I don't know, but I would suspect I'll come up with some that will be a friendly meeting with some positives from both sides. I don't think China is going to give in to any major demands. I don't think we're to make major demands. You know, we both have a lot of common interest. you know, uh, anti-terrorism operation. You know, China is doing a jokes. You know, they have to deal with President Trump. So we'll see how it turns out that you had an amazing treaty. Actually was out. Training was amazing last quarter. How's it going now? Well, I can't comment on that, but, uh, I mean, from the last time Troy spoke publicly, uh, it was fine so far, but I can't give you other information.
But give me a sense. Yeah. When you you guys can see every day volumes are high. Yeah. And Mubarak high. All things being equal, it will be good for trade. But you're part of that. I mean, it's it's you think it's going okay because it depends on the on the kind of trading your high will benefit is going to be very good.
Talk to me about AI. Yeah. So I don't know whether you've also played around with my thoughts. What did you see. Yeah. So I big picture AI is going to cure cancer and reduce workweeks and live blunder. And uh, please be safe and cuddly. Safer and less people die and, uh, you have new drugs, this is going to be good. Uh, and, you know, but there and we we've been using it now for 13 years. It does an amazing job and very good with things that we're going to deploy our customer. There are two attributed people worry about what is my notes. It's legitimate that this this is so powerful. It covers a lot of vulnerabilities. And we're all trying to figure out how to deal with it, not just for yourself, with all your friends, big banks, small banks. So, uh, telecom, the garbage on top of it. A lot of the words like enterprise, they don't have the ability to do it like that. So I think, you know, Scott Bass is running for banks, and I assume they've done it for other people elsewhere. So we're all in our hands, right? It is risky, everyone. And we actually should look at this like a list of what you can do. Now. Don't wait to get Mike knows who's going to get it at one point, but you can't give everyone if they can't handle it when it gets leaked out. It can be used by bad guys before we projected open source code and hard code, and so we need it over what to do to get it done. Right? Right.
And the other one is this job disruption where. Yeah. I just that did. That may be true. We should get prepared for it. We should be breathless. No. And that, to me, is how you create skills and reskilling. There will be a lot of jobs and I cyber events, manufacturing the trades. And then we should make sure locally this like I mean between government and collaboration that we are prepared. If we have too much stop talking about it. Have a plan.
But it might ask what does it change the way that banks have to defend themselves? Are you thinking about cybersecurity? Different side cyber? No. Banks have always been on top and from top to top of the OECD or cybersecurity. I wrote about my chairman's letter cyber is your biggest risk made worse by AI. And that was before my thoughts. So this yeah, this does make it more dangerous. That's why banks are are really working this thing right now. Don't worry all of us. And together we're collaborating. We're not like arguing the judge. What does that mean? What does that actually look like? Crazy. Five, six months old, going through all of the applications and might those patching him up all going through open source code. A lot of flaws in open source code. We don't need to all fix the same open source code. If you fix one, I can fix the other tab with collaboration. Try to figure out how to form utilities to help third parties going to our critical vendors. Not okay to change around the world, making sure they're doing it properly. And there are other things like how do you know the patch needs to be posted publicly in your patch, that fix that patch. Now you have to be open, fix a patch of ours and some you can't make public, but you make it public. The bad guys will get it reverse engineer and get through. So if we're doing all that stuff, it's serious work. I think hundreds of people doing it full time on hyperscalers and also funding of hyperscalers is really propping up the economy.
Do you have any worries about getting that money back or, you know, some of the funding of what's being constructed? Like, the way I look at is that AI is we all a lot of money is going to go into it. It doesn't mean everyone does. It is going to be a winner. Like, you go back to the issue that a lot of people lost a lot of people. One and so know in the hyperscalers that were those data centers, not by use, they probably will. But is it possible some badly designed it badly didn't get the right yet? Of course it's possible. Yeah.
Does it does AI change the way you recruit, the way you hire and the way you work? I think it's going to change almost everything. And I know I've done my stuff and game reports in the morning. I have a new threat. Intelligence report is getting better. So I can say. What did Francine say yesterday and every morning, 5 a.m., to tell me what you had on your people. That might be significant to me. And then you can keep an educated. That's not important. This is important, but significant. So yeah. Well they're using different ways but we will use it. It will change my my day to day. It will inside the company. Can we deploy it going a thousand different use cases today. You're much better off just watching Bloomberg.
Talk to me about the UK. So there's a lot of you know the markets are on tenterhooks to know whether the Prime Minister survives. We don't exactly know what comes next. The markets are nervous. What does it mean for J.P. Morgan among them? Well, look, we've had ups and downs in markets and ups and downs. Politicians are not going to change our fundamental strategy. I would say that Europe, including the UK, know what to do. As to Draghi, before the 300 items in their common capital markets, Covid regulations allowing cross-border and EU competition issues regulatory, not terror, but regulatory burdens. They need to do the same in the UK. I mean, Keir Starmer is a very smart guy. Politics is really tough. They're in a bind because of debts and deficits. And you know they inherited a lot of that. I wore the Rachel Reeves and they got to be tough. They got to say we're going to do these things. And the short term may not be great, but their governments have to get the stuff done right the growth, the economy and militarily. And I think they need to grow closer to Europe. And you know, if you if you remember Keir Starmer and President Macron, they were going to work closer now reversing Brexit. But you know Military alliances. Intelligence lines is making sure the economies you have economic relations are good for the continent and good for your.
Okay. You're building a big mega project. Canary Wharf said everyone is quite excited about Jersey's potential political instability. Actually change your view on everything. You know DC cost going up. Worried about taxation, political instability. But if they become host of the banks again? Yes. I mean, I've always objected to the fact, you know, we didn't damage the UK in any way. We paid probably $10 billion back for taxes by now. I don't think that's right or fair. If that happens too much, we will reconsider.
Look, I know you've also looked a lot at Europe and funding and, you know, especially when it comes to security. I mean, how much time are you spending making sure that defense companies, like companies in Europe have enough funding from JP Morgan to make sure that they can, I guess, defend a lot. So we have this huge effort that we deploy over the years, $1.5 trillion to help. It's not just a Resiliency, even medicines and rare earths, which we need to defend semiconductor defense. But it's anything you need to you. Europe needs LNG. So we look at that resiliency for Europe not only in America but ship in here. So we we have professionals do we've got a unbelievable advisory group. We are dedicated 3040 people. We're doing research now if you like this. And of course the shipbuilding ecosystem, of course, the back to the pharmaceutical system, the river system and then heavy public policy, which puts us in a better position. We, the democratic world, should never have gotten here. We're so reliant on other people, potential adversaries, rare earths. And we did do no prior was build, build. But let's fix it. And we got to fix it right away. And this is good for the US. Does this US need stronger allies? This is good for the US. And I think having a strong allies are good for you. So my view is we need a stronger NATO. They're doing that by the way. So you know our president pushed them a lot. Well they're all doing it, which is a good thing. But we want to keep it together. The goal of it should be to have a stronger NATO. Not a weakening. The goal, in my view. If I if you ask me what the goal should be or economically for Europe, should we have a stronger Europe to get you to help you do the job you report? And I rolled my eyes. Maybe a pipe dream that you did the Draghi report. I would give you one big, beautiful free trade bill. That's what I would do. And you know and it takes some. There are some stupid trade issues in fiction. But with both new cars being better, they do better be good for all the citizens, not just for the big companies. And so. And I think those two things are pillars of keeping the world safe for democracy. So not a minor thing where you think you've looked at over 20 or 30 years.
So, Jimmy, today, how would you fix the Middle East? I don't know. I do not know. You know, I, I, I hear a lot of politicians say there was no imminent threat from Iran. I'm like, that immediately gets my back up because a threat is. But I'm threatening to do something. You. They've been raping, killing and murdering for 47 years. Why? The Western world allowed proxy wars. I mean, we learned a lesson that we should have gone years ago at the head of the state. We should have killed the head of state. You know, and so now we have more risk and maybe more opportunity because people want peace. The middle. Yeah. You know, we have this. It's a terrible situation. I don't know the outcome. I hope there's a plan C or a plan B. I want us to prevail in the way that makes sense. I don't know what the right thing to do was, but I'm not going to say they weren't ready. We should have done nothing.
But. But today, does the Strait of Hormuz need to reopen almost at any cost? I think it will eventually be reopened I don't know. I don't know. Yeah. You talking about the military? Military can play for things like this for 40 years. They have plans. I don't know, the plans are. And, you know, I hope it works. I just don't know.
I mean, what is the one thing you wish you knew now, given that there's a lot of uncertainty in the world, right? Geopolitics. Markets. If you could know one thing for certain from the president, what would it be? Well, I don't know about that. I just want to I look, I just roll up my sleeves and try to make it better than it was. So I don't guess for about one good thing or something like that.