JPMorgan Chase CEO Jamie Dimon Talks Bond Market, Inflation

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Haslinda Amin** (0:07)
All right, we're wasting no time. Let's get straight to our exclusive conversation with Jamie Dimon, Chairman and CEO of JPMorgan Chase. Jamie, good to have you with us. And thanks for having us here.

**Jamie Dimon** (0:17)
Happy to be here.

**Haslinda Amin** (0:18)
The bond market is front and center. We're seeing yields at the highest levels in decades. Yet, we see the stock market keeps rallying, in fact, is again in the money today. Should we be nervous or not?

**Jamie Dimon** (0:31)
Well, I think it's always reasonable in the investing world to be nervous a little bit, because you mentioned the opening. There's a lot of geopolitical risk. You have a bunch of wars going on, which I hope are properly resolved. You have bond rates going up. Inflation is a little bit higher than people thought. So yeah, but I'm not surprised. I think when people say you should be surprised, bond rates can go up.
The notion that somehow people said they'll never go up is the wrong notion. And so companies like us prepare for higher rates, lower rates, and figure those things can happen.

**Haslinda Amin** (1:00)
The thing is, they're at the highest level in decades. I mean, that is where the surprise could be.

**Jamie Dimon** (1:06)
I think they could be much higher than they are today.

**Haslinda Amin** (1:09)
Oh yeah?

**Jamie Dimon** (1:09)
How much higher? You say decades, but we've had one of the greatest bull markets. Other than the brief COVID, since the great financial crisis, we've had a huge bull market, huge lower rates for the most part for a long period of time. But the world changes. We may have gone from a savings glut to not enough savings.
The AI investments, you're talking about in America alone, 450 billion last year, 750 this year, a trillion next year, global deficits that are all time highs, and they are huge. So governments, including ours, has to borrow huge sums of money more next year than this year. So people who own bonds, they tend to look at these things, and both inflation and demands for capital can push up rates.

**Haslinda Amin** (1:51)
The thing is, it's not just an inflation story right now. It's also, I guess, a credibility story, right? I mean, we have an environment where everybody is trying to pay debt, and governments around the world have so much debt at a higher level. I mean, at some point, it's going to hit.

**Jamie Dimon** (2:11)
Yeah, it is going to hit. Like, the US government debt is 30 trillion. The average rate is 3.5 percent. So even today, they can't possibly refinance it at lower than that rate.
They have another $2 trillion to do this year. So yeah, but the thing is, we don't know when. We don't know when the world gets too scared about that, when inflation makes it where people don't want own long-term duration securities, or when it's just a demand for capital. There have been examples in history where there's so much demand for capital, rates are going up, but it's for a good reason. People are making productive investments in the world.
Government spending is often not that. Government spending is much more consumption related, which doesn't help future productivity. So all that spending too drives corporate profits. So people should be that surprised that corporate profits are doing quite well too, which helps obviously the stock market.

**Haslinda Amin** (3:03)
The question, I guess, if I could get you to look at the crystal ball, right? What yield would that be spillover to the economy, to policy, to markets?

**Jamie Dimon** (3:14)
Yeah, so I'm very cautious about crystal balls because I don't think anyone has a crystal ball. We look at all potential possible outcomes, and you'd be surprised from recessions with inflation, from recession with no inflation, from home prices down 40 percent, stock price down 40 percent. It's a wide range of outcome. I think when people think this is our forecast, that that's what's going to happen, and I think that's an intellectual error. I should be much more thinking about range of outcomes, possibilities, probabilities, and for us, we want to handle all of them so we can serve our clients.
So I'm not that worried about our profits going down, the stock going, that doesn't worry me at all. I want to serve our clients and do a good job, and I do worry about the geopolitics for the future of mankind. That's a far more important issue in my mind, but just looking forward, I think it's a pretty, my own view, and it's just different than other people, that rates can easily go up more, and credit spreads can go up more. If people think-