Wall Street Chiefs Stare Down Recession Fear With Upbeat Outlook
Both Dimon and his chief financial officer, Jeremy Barnum, emphasized the strength of the U.S. job market and consumer spending as indicative of JPMorgan’s future growth, even amid rampant fears of recession. They pointed to robust credit-card loan growth and continued strength in discretionary spending, even with a 35% increase in outlays for consumer staples such as gasoline.
“We’ve looked a lot, very carefully, into our actual data,” Barnum said. “There’s essentially no evidence of any weakness,” he said, citing “very strong credit performance” despite broader questions around interest-rate hikes.
‘Modest Deterioration’
JPMorgan, based in New York, added $428 million to the pile of money it set aside for potential loan losses, reflecting “a modest deterioration in the economic outlook.” That marks a reversal from a year earlier, when the company’s results were padded by a $3 billion reserve release.
Investment-banking operations at both firms — the first of the US finance giants to report second-quarter results — were hurt by a sharp slowdown, a decline even more dramatic than predicted by analysts. Investment-banking fees plunged 54% at JPMorgan and 55% at Morgan Stanley as capital markets seized up.
Even as executives talked up their banks’ ability to face down a recession, they’re also preparing for a downturn that could prove deeper than their expectations. Morgan Stanley CFO Sharon Yeshaya said her New York-based firm is performing a close scrub of expenses.
Still, there’s no rush to completely switch strategies, Gorman said.
“We have a lot of stuff going on, and we have choices as to when we do it. It’s sort of Plan A-minus, not a Plan B, if you will — that’s a mindset we’re in,” he said. “However, if things get worse — and, in my career, I’ve seen a lot of recessions, a lot of crises, a lot of damage done to the environment — if things really deteriorated, particularly in the US, then we’d take a much more aggressive position.”
(Photos of Jamie Dimon, left, and James Gorman: Bloomberg)
Copyright 2022 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
