Wednesday, January 13, 2016
J.P. Morgan CEO Jamie Dimon On What the Falling Oil Price Means for the Economy
From an interview with FOX Business News anchor, Maria Bartiromo:
BARTIROMO: What's the impact of the drop in oil that we've seen? How confident are you that the major banks, J.P. Morgan included, have their energy exposure in check?
DIMON: There's an industry where, obviously prices have changed. Remember, commodity prices change like this all the time, and all different commodities, so you should somewhat be prepared for it. And, obviously, debtor countries will be hurt. We'll be fine. We're going to lose some more money on it. I want to be FD [full disclosure] compliant here, we told the world that if oil goes to $30 dollars and stays there for 18 months it would cause us to increase reserves by something like $500 million dollars. Which is fine, we're still going to help these companies get through it, our clients. It's important that we're there in good times and bad. You can't be a bank, and the second something goes wrong you go running. There is a beneficiary of lower oil prices, right? it's bad for Brazil, it's good for India. It causes different flows in the countries around the world, but it's good for consumers, and businesses. So, all those who consume energy are paying lower prices. We have the J.P. Morgan Chase Institute which uses real data that consumers are spending 80 percent of the gas decrease. And they're spending it in T&E, maybe bigger SUV's and houses. It's a benefit a little bit as opposed to being, badly hurt. It's good for the American consumer. Gas is at $2 dollars, and if you adjust for inflation it's kind of the same price is was at 1960.
BARTIROMO: So, you see the data of what everybody's spending their money and you say that they're saving money at the gas pump and going out to hotels and entertainment.
DIMON: And, that's true across the country, by all income levels, about 80 percent, I think, is the number that we think they're spending.
at 7:05:00 AM