How was JPMorgan's fiscal 2018? Well, according to Jamie Dimon's annual letter:
Before I talk about our problems, I think it’s important to put any negatives in context, so first a paean to our nation. America is still the most prosperous nation the world has ever seen. We are blessed with the natural gifts of land; all the food, water and energy we need; the Atlantic and Pacific oceans as natural borders; and wonderful neighbors in Canada and Mexico. And we are blessed with the extraordinary gifts from our Founding Fathers, which are still unequaled: freedom of speech, freedom of religion, freedom of enterprise, and the promise of equality and opportunity. These gifts have led to the most dynamic economy the world has ever seen, nurturing vibrant businesses large and small, exceptional universities, and a welcoming environment for innovation, science and technology. America was an idea borne on principles, not based upon historical relationships and tribal politics. It has and will continue to be a beacon of hope for the world and a magnet for the world’s best and brightest.
Umm, cool. How was the loan business?
Middle class incomes have been stagnant for years. Income inequality has gotten worse. Forty percent of American workers earn less than $15 an hour, and about 5% of full-time American workers earn the minimum wage or less, which is certainly not a living wage. In addition, 40% of Americans don’t have $400 to deal with unexpected expenses, such as medical bills or car repairs. More than 28 million Americans don’t have medical insurance at all. And, surprisingly, 25% of those eligible for various types of federal assistance programs don’t get any help. No one can claim that the promise of equal opportunity is being offered to all Americans through our education systems, nor are those who have run afoul of our justice system getting the second chance that many of them deserve. And we have been debating immigration reform for 30 years. Simply put, the social needs of far too many of our citizens are not being met.
And what about the problems bulge brackets had on their fixed-income trading desks...?
Slogans are not policy, and, though simple and sometimes virtuous-sounding, they often lead to policies that fail. Well-intentioned but poorly designed policies generally have large and unintended negative consequences. Policy should always be extremely well-designed.
In my view, too often we don’t perform the deep analysis required to fully understand our problems. One of the reasons is that we often have too short term an orientation; i.e., looking at how things have changed year-over-year or even quarter-over-quarter. We frequently fail to look at trends over a multi-year period or over decades – we miss the forest for the trees. It’s also important to point out that many economic models that are used to design policy have a hard time incorporating or accounting for the effect of certain factors that can be pivotal but are too complex or qualitative to model.
How's the NIM?
None of these issues is exclusively owned by Democrats or Republicans. To the contrary, it is clear that partisan politics is stopping collaborative policy from being implemented, particularly at the federal level. This is not some special economic malaise we are in. This is about our society. We are unwilling to compromise. We are unwilling or unable to create good policy based on deep analytics. And our government is unable to reorganize and keep pace in the new world. Plain and simple, this is a collective failure to put the needs of society ahead of our personal, parochial and partisan interests. If we do not fix these problems, America’s moral, economic and military dominance may cease to exist.
Umm, long-term guidance?
One of the biggest uncertainties in the world today is America’s role on the world stage. A more secure and more prosperous world is also good for the long-term security and prosperity of the United States. And America’s role in building that more secure world has been and will likely continue to be indispensable.
Jamie, are you running?
One final thought: If I were king for a day, I would always have a competitive business tax system and invest in infrastructure and education as a sine qua non to maximize the long-term health and growth of our economy and our citizens. I would not trade these issues off – I would figure out a way to properly pay for them.
See you in Iowa.
Chairman & CEO Letter to Shareholders [JPMorganChase]