Jamie Dimon on Greece and China: Crisis? What crisis?
This is a money.cnn.com article.
China’s stock market may be insanely volatile and the future of the euro is still uncertain. But it’s business as usual for JPMorgan Chase CEO Jamie Dimon.
Dimon, speaking with reporters Tuesday morning after JPMorgan Chase (JPM) reported better-than-expected profits for the second quarter, sounded remarkably sanguine about the recent turmoil in Greece and China.
It was as if he were channeling Heath Ledger’s Joker from “The Dark Knight” — Why so serious?
Dimon said that it doesn’t matter much for the global economy whether Greece remains in the eurozone or not. But he does think it’s psychologically important for Greece and the rest of Europe.
“Europe needs a rational deal that is proper and well thought through,” he said. “Would you join the eurozone if you didn’t think it had any discipline at all?”
Dimon seemed even less worried about the market mayhem in China.
Chinese stocks have stabilized in the past few days. But there are some concerns that China’s stock market meltdown over the past month could be a sign that the economy is slowing even further than experts (and the Chinese government) had expected.
Dimon disagrees. He thinks that people are overreacting to the natural slowdown in China’s economy after years of double-digit percentage growth.
“You have to separate the financial markets from the economy,” he said. “You can’t expect any economy to have perpetual growth at 10%.”
DImon described the recent choppiness as “bumps in the road” and that he thinks Chinese banks and regulators will be able to handle things even if loan quality in China is a bit worse than expected.
He praised China for being quick to take action to try and stimulate growth and said that the government was making “responsible changes” about market reform and opening up China to more foreign investors.
Dimon added that there was nothing he could think of that would make him nervous about doing more business in China.
Dimon’s candidness and confidence was a return to form for the often outspoken CEO.
In January, Dimon pulled no punches when asked about regulations in the U.S. He told reporters he felt the bank was “under assault.”
But during the company’s first quarter conference call in April, Dimon was mostly tight-lipped in response to questions. His reticence even sparked some financial journalists (including this one) to try and get #quietjamie trending on Twitter.
Investors may have to get used to fewer comments from Dimon though. During the company’s conference call with analysts, Dimon said that “one of these days, I’m not going to come in on this call.”
He said that analysts shouldn’t read anything into that. It’s just that it’s “unnecessary” for him to be on all the calls since CFO Marianne Lake does a good job of giving the quarterly updates.
But a look at JPMorgan Chase’s latest results show why Dimon’s swagger is back for now. Earnings rose 5% to $6.3 billion — largely due to lower legal and compensation expenses. The stock gained on the news and is not far from its all-time high.
Lake also pointed out that the company’s trading business performed well despite the volatility in Europe and China.
And Dimon thinks that even better times are ahead. Once the Federal Reserve finally raises interest rates — which could happen as soon as September — profit margins should improve.
Banks have an easier time making money from loans when they can charge higher rates.
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