Jamie Dimon says America is at a 'pivotal moment'
Jamie Dimon's annual letter to JPMorgan Chase shareholders has been released. The widely read memo offers a glimpse into his views on the economy, not just business, at a “pivotal time for America and the free world” of deep domestic divisions and global uncertainty.
Below are some highlights.
The economy is resilient, but the government supporting it is a red flag. Consumers are spending and investors are hoping for a soft landing. But Dimon cautions that the economy is being supported by rising government spending and deficits. “Today's budget deficits are even wider, occurring during booms rather than as a result of recessions, and have been supported by quantitative easing, something that never happened before the Great Financial Crisis.” he writes.
Inflation may stagnate. “These markets appear to be pricing in a 70-80% chance of a soft landing of moderate growth with lower inflation and lower interest rates,” Dimon wrote, adding that the actual chance is much lower.
Global uncertainty is another dark cloud. Wars in Ukraine and the Middle East could “further disrupt energy and food markets, migration, and military and economic relations.” This shock coincides with a surge in public investment to drive the green transition, restructure supply chains and trade relationships, and boost health spending.
Industrial policy is necessary, but it should be limited and targeted. Mr. Dimon argues that the United States must take a tough stance on China, but it must also engage with the Chinese government. This includes establishing independence in the supply of materials critical to national security, such as rare earths, semiconductors and 5G infrastructure. (Dimon says he understands the Inflation Control Act and the CHIPs Act correctly.)
Dimon warns of deep political divisions in the country. Although Dimon hasn't explicitly considered the election (his public support for some of Donald Trump's economic policies sparked controversy at Davos in January), he said the United States has He said he was tackling a “highly emotional and political” issue. The security crisis and the “fraying of the American dream.”
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About the end of Basel 3: Dimon reiterated concerns that many of the proposed banking rules are “flawed and poorly coordinated.”
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About corporate governance: Mr. Dimon argues that proxy advisory firms like ISS (he recently supported Disney in its battle with Nelson Peltz) have too much influence. He opposes recent efforts to split the roles of chairman and CEO, believing that a universal proxy “makes it easier to put less qualified directors on boards.”
what's happening here
Janet Yellen sees progress in relations with China, but warns there is “more work to do.” The Treasury Secretary said on Monday after a meeting in Beijing that relations between the two countries had stabilized, but it was unclear how the relationship would continue in an election year. Her comments came as the Biden administration agreed to give Taiwanese chipmaker TSMC $6.6 billion in subsidies to begin manufacturing in Arizona in 2028.
Brazil's Supreme Court has launched an investigation into Elon Musk. Chief Justice Alexandre de Moraes began ordering a judicial investigation after Mr. Musk said he would reinstate some X accounts that judges had ordered blocked. The account was not disclosed. Moraes is investigating a “digital militia” accused of spreading disinformation.
Gold has hit an all-time high, and the rise in oil prices has come to a halt. Safe-haven assets have reached more than $2,300 per troy ounce, driven by concerns about escalating conflict in the Middle East and rising demand for precious metals from central banks and Chinese consumers. Brent crude oil prices on Monday were trading near $90 a barrel, down from a five-month high hit last week.
Warner Bros. Discovery show times?
Today marks the second anniversary of the closing of the big Warner Bros. Discovery deal. Crossing this milestone would allow the entertainment giant, which owns the lucrative franchise of HBO, CNN and March Madness broadcasts, to strike the deal without facing a huge tax burden. It means that.
The industry is ripe for consolidation, given the challenges of cable and streaming. The stumbling block is President Biden's antitrust police. “Regulatory constraints limit the deals that can be done, and this is true in most industries,” said Rob Kindler, global chair of M.&A. Paul's group, Weiss told DealBook.
Warner Bros.' Discovery didn't quite live up to expectations. the Shares have fallen 66% since the deal closed (in line with rivals) as streaming bets have weakened do not have (named Netflix). The traditional cable business has been hit hard by cord cutting, creating an even bigger drag.
A $44 billion debt pile could also make acquisitions more difficult. But media mogul and board member John Malone said in November that cash flow was improving and the company could be poised to explore a deal.
A merger with Paramount seems unlikely. Shares fell 5% after talks between the two companies were leaked in December, a sign that investors may not be keen on the company's earnings growth. Exposure to linear media. Either way, there will probably be room for discussion in exclusive negotiations between Paramount and Skydance.
Still, does a spinoff or sale of Paramount's alliances with television networks (like CNN or CBS) make sense in the future?
Targeting Comcast could also face challenges. Investors may like the possibility of consolidating cable, studio and streaming businesses. But regulators will likely ask difficult questions.
Still, don't consider trading. As Barry Diller told the Times last year, there has always been interest in WarnerMedia's assets. “Whether that happens depends on whether someone wants to take it on,” said Mr. Diller, a longtime friend of Warner Bros. Discovery chief David Zaslav.
Reconsidering the trade-is-evil metaphor
As summarized in Mastering the Merger, published in 2004 by two Bain & Company consultants, the conventional wisdom in corporate America has been that for decades, out of the billions of dollars spent on mergers, , about 70% of them failed.
But a new white paper by one of the book's authors and two other colleagues now finds that the opposite is true.70% of his takeover success. DealBook took a first look at the survey to find out what's changed.
Companies are getting smarter about M.&A. In 2004, era-defining deals, including the AOL-Time Warner deal, were transformative and intended to yield significant savings. Now, its goals are more modest, including expanding into new regions and adjacent businesses and adding new talent.
The acquirer is also practicing. Having more conservative merger targets means that companies can pursue more mergers, justifying having an in-house M.&A team. Experts who can better identify promising acquisitions and bring them to fruition. One advancement is a more sophisticated analysis of potential acquisitions compared to previous deals, which often relied on less rigorous financial considerations such as synergies.
“Companies that make frequent acquisitions tend to be “He has the experience and ability to carry out the diligence required,” he told Dealbook.
Serial acquirers tend to have better returns. Bain research found that from 2000 to 2010, companies that made at least one deal a year had a 10-year total shareholder return that was 57% higher than companies that made no deals. Between 2012 and 2022, its spread rose to 130%. This discovery surprised researchers.
Efforts to form a union begin at Harvard University
As auto companies put on high alert the United Auto Workers union's efforts to better organize workers, the union has racked up a series of victories on college campuses far from the factory floor.
The most recent win was at Harvard University. The school's non-tenure-track employees, a group of about 6,000 including faculty, postdocs and preceptors, voted overwhelmingly to unionize last week. This opens the door to negotiations for higher wages, improved job security and stronger workplace protections.
This division creates new sources of tension on campus. Harvard University Since Hamas attacked Israel on October 7, it has been embroiled in a battle over free speech and security, sparking heated debate and a series of resignations from top officials.
Harvard University is by no means an isolated university. Employees at Wellesley College and New York University also voted to unionize this year, joining adjunct professors and postdocs at Boston University, Columbia University, Rutgers University, and the University of Connecticut.
The UAW is at the center of that push. The union has expanded into higher education over the years. And last year, tough tactics to win new contracts from Detroit's Big Three automakers gave the company a boost.
After New York University's successful unionization vote, UAW President Sean Fein hailed the moment as historic for labor organizing efforts on American college campuses. “We support them,” he said.
next week
Congress returns from a two-week recess today, with issues over Ukraine, the TikTok bill, and the Baltimore bridge repair in the spotlight, with a potentially looming question over House leadership. Elsewhere, inflation, central banks and the new earnings season will also be in the spotlight.
Here's what to look out for:
Tuesday: Google's Cloud Next developer conference opens with expectations that the tech giant will make a number of announcements related to artificial intelligence.
Wednesday: The consumer price index for March is scheduled to be released. Economists expect overall inflation to rise by an annualized rate of 3.5%, up slightly from February. Core CPI, which excludes food and fuel, is expected to decline.
The minutes of the previous Fed meeting will also be made public.
In addition, President Biden is scheduled to meet with Japanese Prime Minister Fumio Kishida at the White House. Topic: Trade, AI, China. Also looming at the summit is Nippon Steel's $14 billion bid for U.S. Steel.
Thursday: Today is the European Central Bank's interest rate decision day. Inflation rates are falling relatively quickly in much of Europe, raising the question: Will the ECB cut interest rates? in front What about the Fed?
Friday: Major Wall Street companies, including JPMorgan Chase & Co., Wells Fargo, Citigroup, and BlackRock, will begin reporting their first-quarter results.
speed reading
Information of sale
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Luxury group Puig, which owns the Paco Rabanne and Charlotte Tilbury brands, plans to list in Spain in what would be the biggest IPO in the sector in years. The company aims to raise more than US dollars). (FT)
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Could investors' relative indifference to European stocks prompt the continent's biggest oil companies to consider a larger U.S. listing? (Bloomberg Opinion)
policy
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Democratic Pennsylvania Gov. Josh Shapiro warned that the Biden administration's decision to pause liquefied natural gas projects could hurt his party's chances in November. (FT)
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“Despite tech industry pushback, Maryland passes two major privacy bills” (NYT)
the best of the rest
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