360° Coverage : CEO Jamie Dimon Warns JPM Shareholders To Beware of Costly New...

2 Updates

CEO Jamie Dimon Warns JPM Shareholders To Beware of Costly New Risks and Dangers

Apr 12 2014, 9:47am CDT | by

The latest must-read in financial circles is  JPM boss Jamie Dimon’s 32 page letter to  JP Morgan Chase shareholders made public last week. It is is a mixture of gritty optimism going forward...

Filed under: news

 
 
 

27 weeks ago

CEO Jamie Dimon Warns JPM Shareholders To Beware of Costly New Risks and Dangers

Apr 12 2014, 9:47am CDT | by

The latest must-read in financial circles is  JPM boss Jamie Dimon’s 32 page letter to  JP Morgan Chase shareholders made public last week. It is is a mixture of gritty optimism going forward with rueful  musings on the costly nature of regulation in the wake of the 2008 economic and financial meltdown. Informed Wall Street followers will want to muse over  the warning that “we need to be prepared for even the unlikely and unpredictable bad outcomes” from “risk to the system.”

1.  You will be happy to know “The banking system is almost fully recovered and banks are better capitalized than they have been in 60 years.” Dimon claims  the average equity to assets  ratio is 11.1%, the highest it’s been since 1950, thanks to the absolute need to raise capital resources dramatically since 2008.

2.  Corporations are in extremely good financial shape with cash balances equal to  11.4% of assets, more than double what they were in 2000 when the tech bubble burst. This could be termed preparing for the next  financial- economic crisis.

3. These conservative  financial postures are crucial in light of the “most discussed area of uncertainty”… what effect the reversal of the Fed’s QE policy will have on the economy, markets and the level of interest rates.

4. Dimon bemoans the way ” almost everyone has become a risk expert and sees risk behind every rock. They don’t want t o miss it-like they did in 2008.” Therefore, warns Dimon, these Cassandras “ identify everything as risky.” I can’t say I blame them. It’s better to run scared than be overlain with superficial arrogance.

5. Yes, Obamacare does create uncertainties for many businesses. Yes, entitlement spending on Social Security and Medicare is now 60% of the federal budget and crowding out much-needed infrastructure spending. Yes, U.S. corporate tax policy is “hugely inefficient.” Yes; capital formation as a % of GDP has been at the lowest levels in 40 years. The wall of worry mounts.

6. Making the financial system safe from derivatives, those notorious weapons of mass destruction,  will cost JPM  larger amounts charged on capital, liquidity and margin requirements. Good for the world’s safety  say I.  Dimon worry warts on “how all this  will sort out.” Less dangerously I certainly hope, because derivatives are here to stay as a huge portion of JPM’s balance sheet.

7. Another unpleasant result of 2008 is to make mortgages more costly for lower and middle income consumers, warns Dimon,  concluding it will be harder for the less wealthy Americans to obtain mortgages in the future. This is the price to pay for having given out too many mortgages to unworthy borrowers in the run-up to 2008.

8.  Dimon properly lends weight to increased competition from the so-called “shadow banking system,”  which is made up of money market mutual funbds, huge assset managers like PIMCO and BlackRock, from the growing hedge fund industry, even  innovations like the burgeoning Pay Pal, and the comeback of asset backed financial products. Banks vs. Nonbanks, he seems to say, is changing  financial landscape more than ever before.

All these items add up to the “new financial architecture” which makes navigating a fast changing landscape the Number One challenge for the future to JPM management and its shareholders. It’s very much too early to see what JPM must do to maintain its strategic importance in the finance industry and  the Wall Street pecking order.

 
Update
2

7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (Ne ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH1 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

iPhone app to ensure eye health
Washington, Oct 19 (IANS) Researchers have successfully used an iPhone app for imaging the inside of the eye of immobile and paediatric patients.
 
 
How the birth season can trigger mood disorders
London, Oct 19 (IANS) The risk of developing mood disorders is impacted by the season in which you are born in, a research showed.
 
 
Reheat your pasta to avoid fat
London, Oct 19 (IANS) Love pasta but hate to add those extra kilos around your waist? Cool it down and reheat it again.
 
 
Ebola: Global fight to be coordinated with West African national plans
Accra, Oct 19 (IANS/WAM) The UN and the governments of the countries at the forefront of efforts to turn back the unfolding Ebola virus disease outbreak in West Africa have agreed to ensure that the UN system adopts a coordinated approach to global support being mobilised for national-level crisis response plans.
 
 
 

Latest from the Network

Bush shoe-tossing painting hits record at Doha auction
Doha, Oct 15 (IANS/EFE) A controversial painting by Iranian artist Mahmud Obaidi, depicting an Iraqi journalist throwing shoe in 2008 at then US president George W. Bush, was sold for $62,500 at a Sotheby's auction in...
Read more on Celebrity Balla
 
US offers $45 mn bounty for eight terror leaders
Washington, Oct 15 (IANS) The US said Tuesday it is offering rewards totalling up to 45 million dollars for information on eight key leaders of the Al Qaeda in the Arabian Peninsula (AQAP) terrorist organisation. The...
Read more on Politics Balla
 
UNSC extends peacekeeping mission's term in Abyei
United Nations, Oct 15 (IANS) The UN Security Council (UNSC) has renewed the mandate of the UN peacekeeping mission in the Abyei border region between Sudan and South Sudan. In an unanimously adopted resolution, the...
Read more on Politics Balla
 
Ebola cases in West Africa could reach 10,000 per week: WHO
Geneva, Oct 15 (IANS) The World Health Organisation (WHO) has warned that the Ebola epidemic in West Africa could reach 5,000 to 10,000 cases per week by the first week of December. "Quite frankly, ladies and...
Read more on Business Balla
 
Turkey, Singapore sign strategic partnership agreement
Ankara, Oct 15 (IANS) Turkey and Singapore have signed a strategic partnership agreement to boost economic, political and cultural cooperation, as well as security collaboration, during the official visit of...
Read more on Politics Balla
 
Christina Aguilera is returning to 'The Voice' USA
Christina Aguilera will return to 'The Voice' USA next year. The 'Your Body' hitmaker, who previously shared a rotating spot on the judging panel with Shakira, has been replaced by Gwen Stefani this season as she is...
Read more on Celebrity Balla
 
Kesha's music producer hits back
Kesha is being countersued by her record company boss, Dr. Luke. The 41-year-old music producer, who runs Kemosabe Records, claims the 27-year-old 'Tik Tok' singer is a liar and is trying to extort him after she accused...
Read more on Celebrity Balla
 
Jason Derulo won't get back together with Jordin Sparks
Jason Derulo insists his split from Jordin Sparks is permanent. The 'Talk Dirty' hitmaker, who recently ended his relationship with the 'No Air' singer after three years of dating, has ruled out getting back together...
Read more on Celebrity Balla
 
Josh Groban feels 'very lucky' to be dating Kat Dennings
Josh Groban feels ''very lucky'' to be dating Kat Dennings. The 'Brave' hitmaker was very nervous before singing in front of the '2 Broke Girls' actress for the first time at the Carousel of Hope Ball in Beverly Hills,...
Read more on Celebrity Balla
 
Australian Richard Flanagan wins 2014 Man Booker prize
London, Oct 15 (IANS) The first Man Booker prize to allow American nominees was Tuesday night won by an Australian, with Richard Flanagan triumphing for a novel of love and war that tells the harrowing stories of...
Read more on Celebrity Balla