MARIA: WELCOME BACK.
A FLURRY OF DEALS IN HEALTHCARE
ANNOUNCED THIS WEEK AS JP MORGAN
KICKS OFF THE WELL ATTENDED
INVESTOR CONFERENCE IN THE
INDUSTRY, THE ANNUAL HEALTHCARE
CONFERENCE UNDERWAY IN SAN
FRANCISCO WITH MORE THAN 8,000
INVESTORS AND HEALTHCARE
PROFESSIONALS AND 550 GLOBAL
HEALTHCARE COMPANIES ATTENDING
AND PRESENTING.
I SPOKE WITH JAMIE DIMON FROM
THE CONFERENCE WHERE HE SAID
DEBT CAPITAL MARKETS ARE WIDE
OPEN RIGHT NOW AND THERE’S
INDICATIONS THAT CAPITAL MARKETS
ACTIVITY IS COMING BACK THIS
YEAR AFTER A TWO YEAR DROUGHT.
HE STILL IS NOT CONVINCED OF THE
SOFT LANDING TO COME.
WATCH.
>> I THINK THE TABLE I SAT AT
FOR LUNCH THEY’RE TELLING ME IT
FEELS BETTER THIS YEAR AND AS
YOU MENTIONED A COUPLE OF DEALS
ANNOUNCED THIS MORNING.
I THINK A LOT OF THINGS WILL BE
HAPPENING IN HEALTHCARE THIS
YEAR.
MARIA: COMING OFF OF THIS
LITTLE BIT OF A DROUGHT IN
CAPITAL MARKETS ACTIVITY, I’M
WONDERING IF YOU’RE GETTING A
SENSE THAT THE LOG JAM IS GOING
TO BREAK THIS YEAR IN 2024.
>> I THINK YOU’VE SEEN PART OF
THE LOG JAM ACTUALLY BROKE EARLY
LAST YEAR.
YOU SEE IPOS, NOT AS MANY BUT
THEY’RE COMING BACK, SLIGHTLY
DIFFERENT TYPES, A COUPLE BIG
HEALTHCARE IPOS, M&A YOU’RE
SEEING, PEOPLE WANT TO DO A HUGE
DEAL, YOU CAN DO A $30 BILLION
DEAL FINANCING TODAY SO IT’S
OPEN.
SO AS LONG AS WE HAVE SOFT
LANDING IDEAS AND CREDIT SPREADS
STAY LOW AND MARKETS STAY HIGH,
YOU’RE GOING TO SEE QUITE A FEW
TRANSACTIONS.
I REMIND PEOPLE, YOU HAVE
PIPELINES.
PIPELINES OPEN AND CLOSE.
YES, IT’S PRETTY GOOD TODAY.
YOU CAN NEVER QUITE KNOW.
DOESN’T THE TAKE A LOT TO CHANGE
SENTIMENT.
RIGHT NOW, PEOPLE ARE -- THE
MARKET’S EXPECTING, IT’S PRICED
IN A SOFT LANDING.
YOU SEE THAT IN EQUITY PRICES,
CREDIT SPREADS BEING VERY
NARROW.
THE GOOD NEWS IS, THE CONSUMER
HAS JOBS.
WAGES ARE GOING UP, MORE AT THE
LOWER END.
HOME PRICES ARE UP WHICH IS GOOD
FOR THE BALANCE SHEET.
CREDIT IS NORMALIZING.
IT’S STILL LOWER.
STOCK PRICES ARE UP.
CONSUMER’S IN GOOD SHAPE.
BUT THE EXTRA MONEY THAT THEY
GOT DURING COVID, TRILLIONS OF
DOLLARS, THAT’S KIND OF RUNNING
OUT.
IT LOOKS TO US LIKE IT’S GOING
TO RUN OUT -- IT’S OPINION
BUSHED OUT FOR A -- BEEN PUSHED
OUT FOR A BUNCH OF DIFFERENT
REASONS BUT IT RUNS OUT THIS
YEAR.
THE GOVERNMENT HAS A HUGE
DEFICIT WHICH WILL AFFECT THE
MARKETS.
I’M SKEPTICAL IN THE GOLDILOCKS
HE SCENARIO.
I STILL THINK THE CHANCE OF IT
NOT BEING A SOFT LANDING ARE
HIGHER THAN OTHER PEOPLE.
IT’S NOT TERRIBLE.
IT MIGHT BE MILD RECESSION OR
HEAVY RECESSION.
OBVIOUSLY ALL OF US IN BUSINESS
HAVE TO LEARN HOW TO DEAL WITH
THE UPS AND DOWNS OF THE
ECONOMY.
BUT I DO THINK THE CROSS CURRENT
ARE PRETTY HIGH.
THE MONEY RUNNING OUT, RATES ARE
HIGH, QT HASN’T HAPPENED YET.
Q MAY BITE.
I EXPECT IT TO.
WE’LL SEE MORE VOLATILITY
PARTICULARLY UNWANTED IN
TREASURY MARKETS BECAUSE OF QT.
MARIA: ARE WE GOING TO SEE THAT
RECESSION THIS YEAR?
>> IT’S A POSSIBILITY.
I THINK THEY DID THE RIGHT THING
TO RAISE RATES.
I THINK IT WAS A LITTLE LATE BUT
-- I THINK THEY DID THE RIGHT
THING TO WAIT, SEE WHAT HAPPENS.
AS YOU SAID, IT TAKES A WHILE TO
SEE THE FULL EFFECT OF THAT AND
THERE ARE OTHER FINANCIAL
CONDITIONS OUT THERE.
BUT ALL OF THOSE FACTORS MAY
VERY WELL PUSH US TO RECESSION
AS OPPOSED TO SOFT LANDING.
THE OTHER THING WE HAVE TO
MENTION, THE CROSS CURRENT I’M
TALKING ABOUT IS NOT JUST THE
FISCAL SPENDING QT, WHAT’S
HAPPENED IN THE COVID MONEY,
IT’S ALSO WHAT THE GEOPOLITICAL
SITUATION IS.
YOU CAN’T LOOK AT WHAT’S GOING
ON IN UKRAINE, THE HEART
BREAKING HUMANITARIAN CRISIS,
THE POTENTIAL -- IT’S GONE ON
NOW FOR ALMOST TWO YEARS.
AND OF COURSE THE TERRORIST
ACTIVITIES IN ISRAEL, NOW YOU
HAVE A WIDENING WAR IN THE
MIDDLE EAST.
THESE THINGS WHICH AFFECT -- ALL
THESE THINGS AFFECT OIL, GAS,
FOOD, MIGRATION, ALL ECONOMIC
RELATIONSHIPS AROUND THE WORLD.
ECONOMIC, MILITARY ALLIANCES.
I PUT THE GEOPOLITICAL STUFF AS
SOMETHING YOU CAN’T LOOK AT THIS
YEAR AND SAY THAT IT WILL NOT
HAVE AN EFFECT.
IT MAY VERY WELL.
THAT’S ABOUT THE FREEDOM OF THE
WESTERN WORLD FOR THE NEXT 100
YEARS.
I’M NOT COMPARING THAT REALLY TO
THE ECONOMY THIS YEAR AND SO FOR
JP MORGAN WE’RE GOING TO SERVE
OUR CLIENTS WITH EVERYTHING THE
ENVIRONMENT BRINGS.
WE ALWAYS SAY THAT WE DON’T KNOW
WHAT THE ENVIRONMENT’S GOING TO
BE.
LOOK AT THE RANGE OF OUTCOMES.
CAN WE HANDLE THEM?
AND THE ANSWER IS YES.
MARIA:WHEREYES.MARIA: WHERE DOE
IN.
WE’RE GOING TO GET THREE RATE
CUTS THIS YEAR, POSSIBLY TWO OR
THREE RATE CUTS IN 2025.
DO YOU AGREE WITH THAT?
>> I’M A SKEPTIC.
I THINK BECAUSE OF FISCAL
SPENDING AND OTHER FACTORS -- I
LET ME LIST THEM FOR YOU.
I LOOK AT A LOT OF THINGS.
FORGET ABOUT ECONOMIC MODELS.
$2 TRILLION OF FISCAL DEFICIT,
THE INFRASTRUCTURE AND IRA ACT,
THE GREEN ECONOMY, THE
REMILITARYIZATION OF THE WORLD,
THE RESTRUCTURING OF TRADE ARE
ALL INFLATIONARY AND THAT LOOKS
MORE LIKE 1970s TO ME SO I
THINK THERE’S A CHANCE THAT
PEOPLE SHOULD BE PREPARED THAT
INFLATION COMES DOWN BUT BOUNCES
AROUND 3, MAYBE BOUNCES UP A
LITTLE BIT AND THOSE IMPLIED
CURVES WILL CHANGE.
AND ARE PEOPLE READY FOR THAT?
I’M NOT SURE.
I JUST GIVE THAT A HIGHER CHANCE
THAN OTHER PEOPLE GIVE.
MARIA: LAYER ONTO THAT THE NEW
REGULATIONS THAT ARE COMING AND
I KNOW YOU’VE SPOKEN QUITE A BIT
ABOUT THIS, THE REQUIRED CAPITAL
LEVELS FOR THE MAJOR BANKS AS WE ARE NOW NEARING THE END OF THE
COMMENT PERIOD FOR THE BAY BASEL
END GAMES.
>> I CAN’T WAIT FOR YOU TO SEE
AND READ IF YOU’RE WILLING
TOKING THE HOUND HUNDREDS OF PAG
COMMENTS.
IT WILL BE EMBEDDED IN
EVERYTHING.
SOME PEOPLE SAID BIG
CORPORATIONS CAN AFFORD IT.
THEY’LL PASS IT ONTO CUSTOMERS.
IT WILL BE PASSED ON.
NO ONE EVER LOOKED AT IT AND
SAID HERE’S THE OUTCOME OF THE
CHANGES AND WE WANT THESE
OUTCOMES.
THE OUTCOMES SHOULD BE WHAT YOU
WANT.
THE MORTGAGE BUSINESS IS LEAVING
BANKING.
IF THAT’S WHAT THE REGULATORS
WANT, SO BE IT.
IF WE HAVE TO HOLD 30% MORE
CAPITAL IN THE U.S. THAN
COMPETITORS, FOREIGN COMPETITORS
IN THE U.S., I DON’T THINK
THAT’S APPROPRIATE.
I HAVE STRONG OBJECTIONS TO IT.
I THINK THE WORK WAS POORLY DONE
MF IS IT MOREDONE.
MARIA: IS I IT MORE OF AN ISSU
YOU HAVE TO HOLD RELATIVE TO HOW
MUCH CAPITAL FOREIGN COMPETITORS
ARE HOLDING OR IS IT MORE AFTER
AN ISSUE THAT THESE RULES ARE
TARGETING THE MOST COMPLEX AND
LARGE IN SIZE INSTITUTIONS WHICH
OF COURSE IS JPM?
>> YEAH, IT’S BOTH.
MARIA: THERE’S ALSO NEW
REGULATION COMING ON BITCOIN AND
YOU FAMOUSLY SAID RECENTLY THAT
YOU WOULD SHUT IT DOWN IF YOU
WERE IN GOVERNMENT.
CAN YOU GIVE US MORE CLARITY ON
THAT?
>> I’VE ALWAYS SAID THAT BITCOIN
DOESN’T HAVE VALUE.
AND I DON’T CARE WHAT PEOPLE DO
WITH BITCOIN BUT I WOULD POINT
OUT THAT THE ACTUAL USE CASES
ARE SEX TRAFFICKING, TAX
AVOIDANCE, ANTI-MONEY
LAUNDERING, TERRORISM FINANCING,
IT’S NOT PEOPLE JUST BUYING AND
SOMETHING BITCOIN.
THERE’S NO VALUE TO IT IF YOU’RE
BUYING AND SELLING BITCOIN. MARIA: A LOT OF QUESTIONS AFTER
THE SILICON VALLEY BANK FAILURE.
JP MORGAN YOU ACQUIRING FIRST
REPUBLIC.
DO YOU SEE FURTHER FALLOUT?
ARE WE TALKING ABOUT A TIGHT
LENDING ENVIRONMENT.
>> THE BANKS ARE VERY SOUND.
WHEN FIRST REPUBLIC HAPPENED, WE
TOLD YOU ALL I THINK IT WAS THE
LAST DOMINO, PROVIDED THAT RATES
DON’T GO UP MUCH HIGHER WHICH
THEY HAVEN’T AND WE DON’T HAVE A
MAJOR RECESSION IF WE HAVEN’T.
IF RATES GO UP, A MAJOR
RECESSION, SOME BANKS WILL BE IN
STRESS.
THEY DIDN’T FIX THE FBB PROBLEM
WHICH THEY SHOULD HAVE FOCUSED
ON.
THE LENDING STANDARDS WILL
TIGHTEN.
THAT’S ALL NORMAL.
IT’S WISHFUL THINKING A THAT THE
ECONOMY WILL GET STRONGER.
IT MAY GET WEAKER.
I WOULD THINK HOW TO GROW THE
ECONOMY RIGHT NOW.
AND I THINK IT’S IMPORTANT FOR
THE FUTURE OF THIS SOCIETY THAT
WE GROW, HAVE A HEALTHY ECONOMY.
MARIA: WHAT ABOUT YOUR OWN
INVESTMENT CYCLE?
YOUR TECHNOLOGY BUDGET IS HALF
OF NASA’S TOTAL BUDGET.
OBVIOUSLY THIS IS A PRIORITY FOR
YOU, $15 BILLION AND YOU WERE
FOR A LONG TIME COMPETING WITH
CENTURIES OLD INSTITUTIONS BUT
NOW YOU’RE COMPETING WITH APPLE
AND GOOGLE AND AMAZON.
IS THAT RIGHT?
>> YEAH.
WE’RE NOT JUST COMPETING WITH
THEM.
THERE’S NEW TECHNOLOGY YOU HAVE
TO ADAPT TO, DIGITAL, CLOUD,
A.I.
AND IF YOU’RE A LEGACY CUSTOMER,
DOESN’T MEAN YOU’RE BAD.
IT MEANS WE DEPLOYED HUGE
AMOUNTS OF TECHNOLOGY IN THE
PAST HE WHICH NOW HAS TO BE PUT
INTO NEW DATA CENTERS AND NEW
DATABASES AND TO MAKE IT
ACCESSIBLE TO A.I. OR TO
DIGITAL, STUFF LIKE THAT.
SO THE INVESTMENTS ARE HUGE.
MARIA: IS THERE ANYTHING YOU
WANT TO SAY ABOUT ARTIFICIAL
INTELLIGENCE AND ON A PRACTICAL
MATTER HOW IT’S GOING TO CHANGE
OUR LIVES AND OUR BANKING?
>> IT IS -- FIRST OF ALL, TO
HAVE IT, WE JUST PUT A WOMAN ON
OUR MANAGEMENT COMMITTEE WHO
DOES -- WAS OUR CHIEF DATA
ARCHITECT AND SO IT’S BOTH A.I.
AND DATA BECAUSE THEY’RE
DIRECTLY RELATED AND THAT’S HOW
IMPORTANT I THINK THIS IS.
WE ALREADY HAVE 300 USE CASES
AGAINST RISK, FRAUD, CREDIT,
MARKETING THE, MOVEMENT OF
MONEY, TRADING, HEDGING, IT’S
REAL.
AND YOU GOT TO GET -- FROM A
MANAGEMENT STANDPOINT IT’S GOING
TO BE PART OF THE MANAGEMENT
CONVERSATION ALL THE TIME.
IT’S GOING TO CHANGE A
TREMENDOUS AMOUNT OF STUFF.
IN HEALTHCARE ALONE IT MAY COME
UP WITH NEW COMPOUNDS.
IT COULD DO A BETTER JOB
DIAGNOSING DISEASES, PREVENTING
DISEASES, GOD KNOWS WHAT IT’S
GOING TO DO FOR PEOPLE.
IT MAY HAVE DOWNSIDE.
VERY HARD TO FIGURE OUT HOW YOU
SHOULD REGULATE IT BUT THERE
MIGHT EVENTUALLY HAVE TO BE
REGULATIONS AROUND IT AND THE