Jamie Dimon Understands That His Future President Self May Have To Deal With A Recession And/Or Higher Yields

"Someone asked me once, what's the odds of a recession? I said it's 100 percent."
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Future President of the United States and current man who is 364 times richer than the median person who works for him and an undisclosed number of times richer than Mike Mayo, Jamie Dimon, thinks it's possible that 10Y yields will hit 4% in the U.S.

Why you should give a shit about that largely meaningless headline is anyone's guess, but apparently a lot of people care because it's all over the place on Tuesday.

Here's what Dimon told Bloomberg TV's Stephen Engle during an interview in Beijing:

[If the Fed hikes more than expected] it might force the 10-year up. You can easily deal with 4 percent bonds and I think people should be prepared for that.

Ok. You have been thusly warned. Of course the possibility of higher 10Y yields has been all anyone has been talking about this year and as I wrote late last month, this dead horse has been beaten to the point where it can now be characterized in "more cowbell" terms (to mix farm metaphors).

The rest of Dimon's comments on the subject were similarly plain vanilla. Obviously if yields are rising on growth expectations that's better than if they're rising due to inflation jitters or due to an acute distortion of the supply/demand dynamics in the Treasury market thanks to the combination of increased supply (to fund Trump's tax cuts) and Fed balance sheet rundown.

He also noted that DM central banks' efforts to rollback post-crisis accommodation “may cause more volatility [and] higher rates in a way we don’t fully understand” because “we’ve never had QE" and therefore "we’ve never had reversal."

Exactly none of that is "new" or "news", as it were, which means you should just ignore those soundbites, especially considering that higher long end rates are a boon to NIM so you know, I'm not sure Jamie can be characterized as an impartial guy on this.

As far as the market implications, you're reminded that historically speaking, it's probably more like 4.5%-5% when equities start to get really nervous about 10Y yields, although the Taper Tantrum experience seems to suggest the "pain threshold" beyond which the stock-bond return correlation flips positive leading to diversification desperation might be considerably lower in the post-crisis world.

Again, it is not at all obvious why anyone cares about Dimon's comments and with spec positioning as stretched (bearish) as it is in bonds, it seems like the more likely scenario in the near-term is short covering in the event some kind of risk-off episode catalyzes a safe haven bid.

Whatever. One thing worth noting: if Jamie does end up making a successful run at the White House on the way to righting all of the societal wrongs he elaborated on in his annual letter, he'll inherent an unprecedented mess that, if the IMF is correct, will put America in worse fiscal shape than Italy by the time Trump's first term is over.

So who knows. Maybe we'll all be able to look back at this week's 4% on 10s pseudo-prediction and laugh one day when President Dimon is confronting 10Y yields at 15% thanks to by-then-former-President "King Of Debt's" "very good brain".

Oh, and Jamie had one more pearl of wisdom for everyone. To wit:

Someone asked me once, what's the odds of a recession? I said it's 100 percent. But the question is when.

One more time: why you people care about these headlines is anyone's guess.

Related

Columbia University Students, Faculty, Alums Demand CU President Take Back All The Nice Things He Said About Jamie Dimon

As you may have noticed, Jamie Dimon has had some unwanted attention thrown his way over the last several weeks, on account of one of his employees losing a few billion dollars. Though the JPMorgan CEO has been dealing with public displays of hate previously reserved for Lloyd Blankfein and Goldman Sachs, and will certainly be on the receiving end of a lot more tomorrow when he testifies on Capitol Hill, he has had a few people come to his (and his bank's) defense. Yesterday Stephen Schwarzman told Bloomberg to lay off JD and JPM, noting that "occasional losses are inevitable" and "publicly excoriating JPMorgan serves no purpose except to reduce people’s confidence in the financial system," while former Goldman exec Bill Archer said the whale fail makes him just "kind of shrug." Lee Bollinger, who is President of Columbia and chairman of the Federal Bank of New York's board of directors told the Journal that Dimon shouldn't step down from his post as a director, as some have requested, and that those who cite conflicts of interest have a "false understanding of how [the Fed] works." Some individuals from the Columbia community read Bollinger's comment and, spoiler alert, are not happy. Enter, a strongly worded letter. Mr. Lee Bollinger President of Columbia University Office of the President 202 Low Library 535 West 116th Street, Mail Code 4309 New York, NY 10027 Dear President Bollinger, As faculty, alumni and students of Columbia University, we are writing to express our deep disappointment in your recent decision to support JPMorgan Chairman and CEO Jamie Dimon’s continued membership on the Board of the New York Federal Reserve Bank. As the Chairman of the Board of the New York Fed, your unambiguous duty - as stated by the Guide to Conduct – is to maintain “the integrity, dignity, and reputation of the Federal Reserve System . . . and to avoid actions that might impair the effectiveness of System operations or in any way tend to discredit the System.” By supporting Mr. Dimon’s tenure you abdicated this basic responsibility. By echoing Mr. Ben Bernanke’s remarks that it is up to Congress to address this problem, you denied your duty to ensure the integrity of the Fed. By stating that Congress has more pressing issues to address than this one, you, in essence, urged inaction by all parties capable of affecting this important change. Surely you understand that a functioning financial system is a pre-requisite of our country’s economic recovery. By characterizing those who wish to see Mr. Dimon resign as “foolish” and in possession of a “false understanding” of how the Fed works, you have added insult – and inaccuracy – to the injury of encouraging this institution to continue in its current form. It is worth reminding you that JPMorgan Chase is currently under investigation for its recent $3 billion trading loss – a loss Mr. Dimon initially denied and then characterized as a ‘tempest in a teapot.’ It may also bear repeating that Mr. Dimon has long campaigned aggressively against important regulatory reforms designed to prevent excessive risk taking by Too Big To Fail institutions – institutions the Federal Reserve saved with $3 trillion dollars in special lending facilities and which Congress bailed out with $700 billion of taxpayers’ money. Certainly Mr. Dimon has no place as a leader of this institution. We urge you to reverse your support for Mr. Dimon and call for his immediate resignation. By way of reminder, there is precedent for this kind of action. In April 2011, Jeffrey R. Immelt, CEO of General Electric, stepped down from the NY Fed after it was clear that GE Capital would be regulated by the Fed as a ‘systematically important’ financial institution. As one of the largest banks in the world, JP Morgan is similarly – if not more ‘systemically important.’ As an educator, you have a special responsibility to demonstrate moral and intellectual credibility, something you have failed to do in this situation. As the president of a university, you have a responsibility to ensure that students have the best possible opportunities upon graduation. Surely you understand the connection between the unemployment crisis facing young people in America and the 2008 financial collapse. That collapse not only threatened the employment potential of millions of American students, but also risked the fiscal health of the parents and grandparents who co-signed their educational loans. That you would choose to uphold the interests of major financial institutions over students and their families is unimaginable. We certainly hope that the contributions made to Columbia by JPMorgan – sums north of $500,000 – had nothing to do with your decision. Three years after the biggest financial crisis since the Great Depression, the country is struggling to rebuild its economy. A stable and appropriately governed financial system is a critical pre-requisite of our recovery. As the Chairman of the NY Fed, we urge you to take the obvious step of demanding Mr. Dimon’s resignation. Thank you, Current Students, Alumni and Faculty of Columbia University Richard Adams Graduate Student and Alumnus Marcellus Andrews Professor of Economics Columbia University John Atlas President of the National Housing Institute Charles H. Revson Fellow, 2004 Partha Banerjee J-School, 2000 Hilary Beattie Asst. Clinical Professor of Medical Psychology in Psychiatry Carl Bettendorf Alumnus and Adjunct Faculty Lila Braine Dana Burnell Alumni Sylvia Bettendorf Student Jamie Chen CC Class of '09 Paul Colson Faculty Jonathan Crissman Student Mina Dadgar Alumni Carolyn Douglas Associate Professor of Psychiatry Nnaemeka Ekwelum Class of 2012 Tim Foreman Student David Friedman Officer Danielle G. Student Nancy Goody Alumnae -GS of Arch & HP Warren Green Administrator Robert Hanning William D. Hartung Center for International Policy Columbia College Class of 1978 James Hone Faculty Bonnie Kaufman Faculty, Medical School Jee Kim Columbia College, ‘95 Susan Lob Adjunct Faculty and Alumni Barbara Lundblad Faculty Union Theological Seminary John Markowitz Professor of Clinical Psychiatry, Alumnus College '76, GSAS '78, P&S '82 Rangi McNeil School of the Arts Alumni Sara Minard Faculty Federick Neuhouser Professor of Philosophy Michael Newell Kaveh Niazi Alumni Jeffrey Ordower Columbia College Class of 1991 Alexandra Pines Class of 2016 Ai-jen Poo Director National Domestic Workers Alliance Bill Ragen Columbia College 1980 Yuliya Rimsky Columbia University Alumnus Class of 2012 & SIPA student Class of 2014 Katherine Roberts Alumna, GSAS Eva Salzman Alumni Jeff Schneider Alumni Shruti Sehgal BC Alumnus, Class of 2011 Eric J. Schoenberg Adjunct Associate Professor Columbia Business School The Honorable David Segal Former RI state representative CC ‘01 Anat Shenker-Osorio Founder and Principal, ASO Communications, Columbia College '99 Kobi Skolnick Current student of Negotiation and Conflict Resolution, Class of 2013 Jill Strauss Denise J. Tartaglia Alumni Stephanie Taylor Co-Founder, Progressive Change Campaign Committee, Columbia University alumni, SOA '07 Alan Wallach Alumnus Mark Watson Alumnus James Williams Officer Libraries Thomas J. Yager Associate Research Scientist, Mailman School of Public Health

Jamie Dimon Reminds Mike Mayo He Drove To Work In An Eighty Thousand Dollar BMW

Mike Mayo: I think what I hear UBS saying in their presentation is, if I'm an affluent customer, I'll feel a lot better going to UBS if they have a 13 percent capital ratio than another big bank with a 10 percent ratio, do you agree with that or disagree? Jamie Dimon: So you would go to UBS and not JPMorgan? Mike Mayo: I didn't say that, that's their argument. Jamie Dimon: That's why I'm richer than you.