Thursday, April 7, 2016

Jamie Dimon Gets It Right on the Interest Rate Threat

Jamie Dimon, Chairman and Chief Executive Officer of JPMorganChase, wrote in the bank's annual report to shareholders (my bold):
No, we are not worried about negative
interest rates in the United States. For years,
this country has had fairly consistent job
growth and increasingly strong consumers
(home prices are up, and the consumer
balance sheet is in the best shape it’s ever
been in). Housing is in short supply, and
household formation is going up, car sales are
at record levels, and we see that consumers
are spending the gas dividend. Companies
are financially sound – while some segments’
profits are down, companies have plenty of
cash...
I am a little more concerned about the opposite:
seeing interest rates rise faster than
people expect.
...If we ever get a little
more consumer and business confidence,
that would increase the demand for credit,
as well as reduce the incentive and desire
of certain investors to buy U.S. Treasuries
because Treasuries are the “safe haven.” If
this scenario were to happen with interest
rates on 10-year Treasuries on the rise, the
result is unlikely to be as smooth as we all
might hope for.
Dimon nails it, the near-term threat is climbing interest rates. Of all the top banksters, he seems to have the best take on the economy.

  -RW

3 comments:

  1. But, yields are dropping below 1.7% on the ten year note as we speak, breaching a lower weekly trend line. If yields don't begin moving steadily higher within the next few weeks, I'd wager that yields will continue to move lower until the Fed either eases or surprises the market by not raising the Fed funds rate when they're expected to.

    ReplyDelete
  2. .
    Anyone who believes a word of what Dimon says is a jacka## in my opinion.

    Of course Dimon is not worried about negative interest rates, these rates
    steal from the savers and force them into a risky market, or other malinvestment.

    It is all a sham, job growth is waiters and uber drivers, car sales are to subprime
    fools that fall for the sales pitch, housing growth is in large part in large cities and driven by money laundering and foreign investment.

    ReplyDelete
  3. .
    Anyone who believes a word of what Dimon says is a jacka## in my opinion.

    Of course Dimon is not worried about negative interest rates, these rates
    steal from the savers and force them into a risky market, or other malinvestment.

    It is all a sham, job growth is waiters and uber drivers, car sales are to subprime
    fools that fall for the sales pitch, housing growth is in large part in large cities and driven by money laundering and foreign investment.

    ReplyDelete