Wall Street Legend Says He's Still Bullish On Markets Despite Recent Fears

0:00Jamie Dimon:Hello, everyone. We've got Jamie Dimon's latest thoughts on the U.S. economy. We've got a brand new mortgage product that's going to make homes more affordable. And we have five charts that are going to prove why the U.S. is going after Iran and Venezuela. We're live today from the desk of Anthony Pompliano.

0:24Jamie Dimon:Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers on YouTube, hit the button and let's get into today's episode. Now, everyone knows Jamie Dimon. He's got a lot of data and he understands what's happening in the U.S. economy better than most. He's got all of these quants, all of these nerds sitting at JP Morgan, and they're constantly telling him, here's what consumers are doing. Here's what businesses are doing. Here's what all of the data is saying. So whenever Jamie Dimon talks about the U.S. economy and his recent thoughts, I'd perk up and I'd take a listen.

0:51Jamie Dimon:Jamie was recently at a conference and he was interviewed and he said that he thinks that the U.S. economy is doing just fine. Take a listen here.

1:26Anthony Pompliano:divide and conquer the Western world, both militarily and economically. You have all their neighbors are re-arming because of their actions, not because of anyone else. So those are the most important things. I'd add global deficits are so large, but those are, I call them, large moving tectonic plates that may or may not affect the economy in the short run. They may be determinative in the longer run. And some of these things, when you talk about war, Vietnam, did it affect the economy in the very short run? know it had a 20-year effect after that. So you got to look at these things as they're moving plates that can take five years to have an effect, but the effects will be real.

2:04Anthony Pompliano:Right now, the economy is doing fine. Asset prices are high. People are assuming things go on. I mean, nobody you talk to has any idea that credit spreads can gap out a lot. And they could, just because of sentiment. And so, yeah, I think there's a little bit of this, a little more exuberance than I think there should be. But we've had years of it. And, you know, the one big, beautiful bill adds to, you know, adds to growth this year. Bank deregulation, other deregulation adds to growth and animal spirits. So we'll see.

2:34Jamie Dimon:Now, of course, Jamie's a pretty rational person, and he's not just going to say everything's fine and he's got no worries. He does think that inflation could be a potential skunk at the party. Take a listen to his rationale.

2:44Anthony Pompliano:Well, how offsides would this market be if there were truly a stagflationary shock, given the fact that there seems to be comfort with the idea of disinflation right now? Well, I think that's true, but I think that was true before this war. So if you look at, you know, my view is that the price, the asset price is kind of high, credit spreads are kind of low. There's kind of a lot of complacency in the market. I'm not sure, you know, we look at risk. We look at the broad range of outcomes, and there are negative outcomes, but one of them would be, you know, inflation. I call it, that's the skunk of the party.

3:11Anthony Pompliano:So it's been coming down, but it seems to maybe have leveled off around 3%. If things make it go up, and this is only one thing. You know, you can look at medical prices, construction prices, insurance prices, wages for certain things. Other things, you know, inflation is a big thing. It's not just oil. So, you know, we'll see. Right now, this will add a little bit, literally a teeny bit to inflation.

3:31Jamie Dimon:Now, I don't necessarily agree with Jamie. I've continued to say that I believe that inflation is not the risk. Actually, deflation is the risk. We know that deportations, artificial intelligence, robotics and tariffs are all deflationary forces that are swallowing the U.S. economy. I get that he thinks that everything's going fine. And he's worried about that inflation. Yes, of course, if we're going into Iran, if we're going into Venezuela, if we are actually going to have oil prices spike higher, all of those things could lead to inflation. But I don't think that's going to happen. And instead, what we saw with true inflation recently is that inflation went back down below 0.8.

4:04Jamie Dimon:That means to me that deflation is a bigger risk, not inflation. Everyone knows that homes are incredibly unaffordable in America right now. We know that the average mortgage payment is doubled since 2020. We also know that the number of pending home sales in America is at a record low since they started paying attention to the data. It's a really bad problem. One of the key inputs to that is how expensive is capital. If mortgage rates are high, then it's more expensive for people to be able to buy a home. And so that's why yesterday, Opendoor announced a brand new mortgage product. Now, this is very interesting because they announced it with a 4.99 % interest rate on that mortgage.

4:39Jamie Dimon:That is significantly lower than the about 6 % mortgages that are out there right now. So how exactly is Opendoor able to get 4.99 % mortgage? Well, Kaz, the CEO of Opendoor came out and he explained what they are doing is they are essentially trying to automate every single piece of the function of actually issuing a mortgage. They're doing the mortgage in-house. And so they're able to strip out a bunch of the bureaucracy, a bunch of the inefficiencies. But on top of that, Opendoor seems to have asked themselves, how could we actually get a mortgage product to the end consumer at the cheapest rate possible, rather than how we could get a mortgage product to the end consumer and make the most money.

5:11Jamie Dimon:See, incentives matter. And so anytime that you have somebody who's showing up and saying, we actually want to help the consumer, we want to drop the cost of this thing, and we want to be the lowest cost provider, they start to do all sorts of different things that may not be economic for the company, but it's better for the end consumer. Now, this is the entire strategy that Kaz used when he was at Shopify. Him, Toby, Harley, and others that led that leadership team, they all realized that owning the relationship between Shopify and the business owner, that was the key. And then once you have that relationship and that trust, you can then sell tons of services around it.

5:43Jamie Dimon:Well, that's what they're going to do at Open Door here. Yes, they want you to go and buy and sell homes on their platform. But obviously, they're going to also allow you to go ahead and borrow a mortgage. And if they can do it at the lowest cost, that's going to bring more and more people to the platform. And so having a mortgage rate that now is going to sit at 4.99%, sure, it's only in testing. But my guess is that this thing's going to be hot. And the reason why it's going to be hot is because homes are so unaffordable. And so getting a 4.99 % mortgage today means a lot of people, they're going to be jumping up and running on over to Opendoor.

6:13Jamie Dimon:One of the big questions going on in the global economy right now is why is the United States going after Venezuela and Iran? But the thing is, it's not really about Venezuela and Iran. Sure, we're engaged there in terms of going and capturing Nicolas Maduro or we are striking Iran. But this is all about a geopolitical conflict with China. And China is actually the target of the U.S. actions. Let me explain what's going on here. So we know that China actually gets a huge amount of oil from Iran, Venezuela. For example, last year, Iran and Venezuela exported most of their oil to China. Iran was at 87 % of all oil produced.

6:45Jamie Dimon:They actually exported that to China. On top of that, 55 % of all exports from Venezuela went to China. That's a big deal. Now, we know that 17 % of all Chinese oil imports, those came from Venezuela and from Iran. Big deal. On top of that, we know that China is importing about 5 million daily barrels of oil through the Strait of Hormuz. That's why all of a sudden that strait has become so important, especially because most tankers are unwilling to actually go through while there's conflict going on in Iran. And then lastly, we also know that Asia is very dependent on all oil that is coming through that strait of Hormuz.

7:19Jamie Dimon:Some countries, it's as much as 80 or 90 percent of all oil actually comes through that strait. And so as long as the United States is engaged in conflict in Iran and Iran shooting missiles all over the Gulf Coast region, there's going to be less oil that flows through that. And that's why people are so worried about oil prices spiking higher. Now, the thing is that the United States also seems to have been somewhat strategic. We went into Venezuela and got Nicolas Maduro. It seems like now we've got a lot more control over the oil that's coming out of Venezuela. And we did that before we went into Iran.

7:49Jamie Dimon:It allows the United States to be able to have a much better control over oil prices globally. And my guess is that it was able to deter a lot of the potential economic pain that came from our decision to go into Iran. And so the question turns to China. What exactly are they going to do? They're going to get less oil. And so are they going to change their geopolitical strategy? We know that the United States just made a move on the chessboard and now the ball's in China's court. That's it for today's show. Thank you guys so much for paying attention and watching. I really appreciate it. Please remember to subscribe on YouTube and I will see you all live from the desk of Anthony Pompliano tomorrow.