Jamie Dimon, head of US bank JP Morgan Chase: I am worried about the global economy

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1:27be Lady Gaga. Only the things that you can't solve with government and private sector is where you bring philanthropy in. There's no place in the world where women are equal. Every generation, every generation has to fight to maintain democracy. For this interview, I met Jamie Diamond, head of JPMorgan Chase, America's largest bank, while he was in Bournemouth, England. He oversees more than$4 trillion worth of assets, but his influence extends far beyond his bank's balance sheet. Mr. Diamond has the ear of President Trump as well as other leaders worldwide. He's even talked about as a future US president himself.

2:04Given the chance, he tells me, jokingly, he'd take it and says he'd do a good job. You're also going to hear about his fears for a potential significant fall for US stock markets, thanks to what he sees as high levels of global uncertainty, soaring valuations, as well as his take on the lessons to be learned from the Russian invasion of Ukraine. I think the world changed after the invasion of Ukraine. I mean, we haven't had a major war in Europe like that. I knew that the day after. And now other flaws have turned out that we didn't have quite the resilience we thought we had. COVID showed that, but so did the invasion.

2:38People talk about stockpiling, you know, things like crypto. I say we should be stockpiling bullets, guns and bombs. I mean, the world's a much more dangerous place and I'd rather have safety than not. Mr. Diamond tells me he's not a tariff guy, but if there is unfair international trade or a threat to national security, then tariffs can be a justifiable tool, even if it adds to the risk of inflation. And while he agrees there will be huge benefits to come out of the current wave of investment in artificial intelligence, he warns there will also be a lot of money that gets wasted. Jamie Dimon has been the boss of America's biggest bank for nearly 20 years.

3:15He survived the financial crisis and seen a lot of boom and busts in his time. Welcome to the interview from the BBC World Service with Jamie Dimon.

3:27We've seen stock markets at record highs in the UK and the US. A lot of people saying that this is beginning to look a little frothy. The Bank of England said it looks like it was stretched valuations, started to remind them of the dot-com, the peak of the dot-com era. What do you make of it? Well, I don't necessarily pay that much attention to what central banks say. Any way you measure equity valuations and even debt valuations by credit spreads being very low, it's high. It's in the 85 % and 90 % of any way you measure it. It is in the high category. That creates another element of risk. And I personally think a lot of that is driven by the money that's been thrown into the system since COVID.

4:07I'll give you United States numbers,$10 trillion of additional federal debt. These are global phenomena, by the way. We had$4 trillion of QE after COVID. Well, that, again, you know, capital and money is like liquid. It fills every crevice in the floor. That crevice could be venture capital, stock prices. But now you have it in mem stocks and some of the crypto world and gold is, you know, hitting all-time highs. So, yeah, I put it in the high category. But that does not mean you don't have a healthy environment that justifies it. You don't see a crash coming? You don't see a correction coming?

4:40I am far more worried about that than others. So if you said, now I'm talking about probabilities, I would give it a higher probability than I think is probably priced in the market and by others. So if the market's pricing in 10%, I would say it's more like 30%. So one third chance of a correction. Yeah, and I'm not saying next year. Because the timing of these things is almost impossible. So it could be what, six months? Could be a year? Could be six months, could be two years. Okay, so sometime in the next six months or two years, you see a high probability of a correction. Yeah, you see a lot of things out there that, you know, the amount of uncertainty, and I put geopolitics in that category, fiscal spend in that category, politics in that category, the remilitarization, the world in that category, all these things cause a lot of issues that we don't know how to sort out.

5:25So I say the level of uncertainty should be higher in most people's minds than what I call normal. Normal always has quite a bit of uncertainty, by the way. If you look at some of the things that are going on in the AI, in the tech space, you've got NVIDIA taking stakes in OpenAI, Microsoft taking stakes in OpenAI, the federal government taking stakes in Intel. There's all these cross-holdings. It looks a bit weird, doesn't it? A little bit, yeah. How would you describe it? Well, AI is a little bit different, you know, and there are some justification for vendor finance and things like that. So you literally have to go through each one.

5:57And regarding America's investments, I think, you know, when people talk about stockpiling, you know, things like crypto, I say we should be stockpiling bullets, guns and bombs. I mean, the world's a much more dangerous place. I'd rather have safety than not. But there is unfair trade. And then there's also national security related. And in some of those, the only way to fix it might be industrial policy. But are we, you know, is it possible to tell whether you're in a bubble before it bursts? It feels like, you know, in terms of AI valuation. Some of these companies like NVIDIA and, you know.

6:28It's only possible to tell what I said in terms of very high valuations. It's really impossible to tell the burst. And I've looked at, you look at history, the 74 crash, the 82 crash, the 87 market, the 90, the internet one. No one's really forecasting that. And there's all that hype out there. And then you also take AI. There's a lot of money going into it. But the better way I look at it, the better way AI is real. AI in total pay off. Just like cars in total paid off, TV in total paid off, but most people involved in didn't do well. So some of this money will be wasted. So think of the internet bubble, I think a trillion dollars was lost at one point.

7:04You do have Google, Facebook, YouTube, Microsoft. You have huge things that came out of it that are hugely beneficial. But does that mean some of the money being spent right now will inevitably be wasted money in the final analysis? Probably, yeah. Okay. That's why when you're in the art business, I'm very careful of what we finance. Okay. You said that you would stockpile missiles. Why would you do that? Well, I think the world changed after the invasion of Ukraine. I mean, we haven't had a major war in Europe like that. I knew that the day after, you know, we were all lulled into a false sense of security.

7:37You know, and now other flaws are turning out that we didn't have quite the resilience we thought we had. COVID showed that, but so did the invasion. I think that if Ukraine does not end up being a sovereign and free nation, then Russia may very well be testing a lot of other things, which they've done recently, you know, with the drones and planes into the airspace of Estonia, then it also will cause our allies, American allies, to say, can I rely on you? And I'm talking about Japan and Korea. I was just there. And if they can't, they have to do other things. And to me, the worst part of that is the nuclear proliferation may lead to, is that all of a sudden, you know, nations may say, you know, the only thing that could really protect me is having nuclear weapons so no one touches me.

8:21Let me just bring it back to the financial world. When I look at things like crypto, Bitcoin price, you look at gold, some will say that is a symptom of a world that has lost faith in the US dollar, lost faith in US economic leadership. What do you say to that? I don't think they've lost faith. I think they're questioning a little bit more. And then you have about the dollar. The dollar is still the best currency in the world. The US Treasury is a full taxing authority of the federal government on the most prosperous nation the world's ever seen, defended by courts, the rule of law, the United States military.

8:53That is not replaceable. I do think that people should think about, well, you know, a big portion of our investments are in dollar, and maybe we should reduce that a little bit. That's fine. I don't think it's going to go away as a reserve currency. There's a little less comfort in America today because, you know, all the actions were taken, and, you know, we'll all have to deal with that. Let's talk about that, because you talk in your shareholder letter saying that you're very cautious. What you seem to be really worried about is the nature of the U.S.'s economic and military alliances. Are you an unreliable partner in the U.S.?

9:27No, this is very... Less reliable? Yes, a little less reliable. And so I'm always, when I go to the United States, NATO needed to do more. That was a good point. In fact, I've spoken to a lot of leaders here who say, you know what? That was a wake-up call and we needed it. Okay, you might have been delivered differently, but that was a wake-up call. The goal should be, in my opinion, to make the Western world stronger militarily, more together, not question it. So we're trying to make NATO stronger, and we're part of it. And all these foreign economic things, which are actually more complex, you look at trade and investment and development investments, is to make the Western world stronger and better, not to hurt it, not to fragment it, to pull it together.

10:10Maybe there's some harsh medicine in that, but that would be my goal. I don't want to see the book written how the West was lost. I want to make sure our policies don't fragment what is the wonderful part of the Western world, the democratic world, the free world. And that includes Japan and Korea and Australia and Europe and the Philippines and America and Canada and Mexico. And I believe that is a beautiful thing worth keeping, whatever the flaws are. But you've warned before about those who would dismantle the rules-based system that we've developed. and that includes institutions like NATO, the UN, the IMF.

10:45President Trump has attacked all of those. Is he helping? I wouldn't put them all in the same boat. Okay, he's attacked some of those. Yeah, no, but I say, I think the military alliances are critical. That military umbrella has kept the world safe and free. The UN has a lot of flaws, you know, and I listen to some of my stuff. NATO, a lot of flaws? No, no, no, NATO is the one that we should keep together and strengthen. The flaw was that European countries didn't do enough. And now they want to, which I think is great that they're getting organized and coming together and making sure they do more.

11:15But some of those institutions need more than a little reform. They need a real kick. OK, but you watch, if you look at presidents Putin, Xi, Modi, Kim Jong-un, hanging out in China together, high-fiving each other. And, you know, some would say that actually President Trump has played a part in pushing those people into each other's arms. And how did you feel when you saw those guys hanging out? I went completely separate. I ran in Russia and North Korea from China and India. You know, we're friends with India. They want to be friends with us. I was just over there. Modi, they're his neighbors.

11:50You know, I mean, it's very hard if you're a political leader to act like you're not going to go visit your neighbors with whom you have trading relationships and economic relationships, whether you agree with everything you're doing. So I don't look at that as that bad. I would like to bring India closer. In fact, I've spoken to several of the Trump officials who they want to do that. And I've been told that they are going to do that. And I hope that's true. You're not going to get them to be non-aligned. On the other hand, as long as Ukraine is a real problem, I think we should be doing as much as we can to help Ukraine.

12:19You talk about moral power as well. Do you accept that some people think that's been weakened? And you warn failure on that score could be catastrophic. What happens if we don't get this stuff right? You have a fragmented world. It looks a lot like it did before World War II and World War I. and nations will be looking for economic, military, security relationships that may not be what we would like. And it may not be what the Western world would like. And it could even, if you look at Europe, I think the European Union is one of the great accomplishments of all time. Not World War I, World War II, but thousands of years, the Hundred Years' War, the Napoleonic War, the Franco-Prussian War, the Spanish War, the War of the Roses, got together in a room to say, let's resolve our differences by peaceful political means.

13:01And it kind of got bogged down. I think most people know it. And I understand that, but I think they're better off finishing it. You know, they have 450 million people, have a common market, allow, I think, here's one, I think banks should be allowed to consolidate across that. Now, that would be tougher for us, but better for Europe. In this case, you have a much stronger Europe. The people of Europe would benefit enormously from a big common market, but not every nation can have its own champion.

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14:08For this episode of The Interview, I'm speaking to Jamie Dimon, boss of US Bank JPMorgan Chase. Jamie Dimon is a rock star of global finance. He's a billionaire in his own right and his advice is sought by business leaders and politicians around the world. And yet he has a folksy kind of charm which has made many think he should be a politician himself. While he'll talk to the financial press, he very rarely does broadcast interviews. I've been trying to get him in the chair for years, and I got him in Bournemouth, a fairly sleepy town in the south of England, where JP Morgan employs over 4 ,000 people and are investing nearly$500 million in their support service functions there.

14:46His arrival saw employees packed into a town hall meeting. There were cheers, high fives, selfies. But despite the fun and high spirits, he had some deadly serious warnings about the rising economic, political and military risks facing the world. Let's return to my conversation with Jamie Dimon. You mentioned in your letter that you worried that there might be a bit of inflation caused by tariffs, increased probability of recession. What do you make of it so far? What are you seeing? Yeah, so it's really hard to tell because, you know, even when you negotiate 15 % tariffs, it applies to half of the imports in the country and some aren't even in yet.

15:21They backed way off the very high liberation debt, which I thought was the right thing for them to do. So my view is it's going to add a little bit to inflation in a couple of little waves. Probably true that it's one time. OK, but that does not mean you won't have inflation driven by fiscal spending, other nations, activities, these geopolitics, things around the world. So wages going up. Our medical costs are going up 10 percent next year. And we think it's going up 10 percent in 2027. It's$30 ,000 a family now. So I think there are other forces that are going to drive inflation. tariffs is once drawn the camel's back.

15:56Good thing or a bad thing, tariffs generally? Look, I'm not a tariff guy, but I try to separate when I hear people talk about it. If you are fairly combating unfair trade, and think of China for the most part, we think it's unfair. They're subsidizing in a million different ways, cars, batteries. Yeah, you can use tools, tariff being one tool. If it's national security and you have to resource, insource, or friend source, us, you know, something, I think it's a fair tool. You know, if it's just, I wouldn't agree with the ones on furniture. I don't think it matters where furniture is made. I don't think it's national security.

16:31And if we all can't buy new furniture for a couple of years, we'd be fine. Okay. What are the things that keep you awake at night? What are the risks out there? I think you talked a little bit about, you know, cracks appearing in the bond market. Where are the big risks? Well, economically, I always say, I try to think what might be the surprise. The surprise would be bond rates going up because you have, and worse than economic kind of a stagflation, rates going up and you're actually going to recession. And we've had that, I've experienced that before. I hope it doesn't happen. I just think the odds are a little bit higher than other people.

17:03And then geopolitics. That to me is the one thing, like I said, I don't want to see the book written, how the West was lost. We, America, and other nations started taking actions that fragmented what happened after World War II. All the Bretton Woods organizations, some of which are quite good, some of which need reform, but I'd rather reform them than break them. But it feels like a kind of dark moment at the moment, doesn't it? I mean, where do you see us? What does right now remind you of risk-wise? So I'm going to answer two ways. If you open a newspaper and anyone can do this of any week, of any month, of any year, it's pretty dark stuff out there.

17:39So it's always a high level of dark stuff. And sometimes in the current time, you overreact to that. I think it's a little worse than that because of this war in Ukraine, because of Iran and North Korea and nuclear proliferation. So I think it's a little bit worse than that. And that's what we're about. And we need, really, we need good American leadership. Do you have that, though? A lot of people would say that America is now not the same kind of reliable ally, economically, trade-wise, militarily, that it has been in the past. That's hard to argue with, isn't it? Yeah, but I would argue less reliable is not the same as unreliable.

18:14We were so reliable. But you would accept the US is less reliable. Yes. Yeah. And at a crucial time. Except, you know, what I also see, you know, President Trump and his folks have gone this 20-point plan. I've spoken to a lot of people about it. This is good. This would be great for the world. The president does things differently. Like I tell people, I don't comment on everything that Biden did. I'm not going to comment on everything that President Trump does. And do you think this sense of uncertainty globally, is that contributing to things like the price of gold? You think gold's at$4 ,000 an ounce.

18:48And people look at that. What does it tell you? The world's less certain. You want something that holds real currency, real value. Central banks are buying a lot more gold. Why are they doing that? I don't know. You don't know? Like I said, I'm not able to call it. That's their normal job, by the way. America's got like a trillion dollars of gold. Well, I mean, I'll put it to you again. that the people are buying gold and crypto because they think that the banking system is antiquated and, you know, it's on its last legs. They've lost faith in US dollar leadership and they're looking for something else.

19:23And it's actually quite a dismal judgment on the economic system. Maybe. And I wouldn't put gold and crypto in the same category. I'm not worried about the gold, the banking system, the dollar. I am worried about the global economy for all these various reasons, that is a reason that someone would say, I'll put a little bit of gold in my portfolio. I'm not going to do it, but I completely understand why some people are advising to buy some gold. I'm very comfortable in JP Morgan. I'm very comfortable in the dollar. If most people had won all their money and they could only put it in one country, what country would that be?

19:58I'm guessing you're going to say the United States. Well, it's pretty obvious. Still? Yeah. It's the best economy in the world. You can do whatever you want with the dollar. You You can buy a house, you can build a company. You're protected by the Atlantic, the Pacific, the United States military. You used to say put all your money in the US. No, no. Now you're saying if you could only put it in one country. No, I never said that. I think Europe has a lot of great companies that are buys right now. I want to ask you about Europe. You said that there's a danger that it's in structural decline in terms of living standards and relevance.

20:28What is Europe getting wrong? What's the warning to Europe? One of the numbers I look at, which is tough, is it's gone from like 90 % of the GDP per person of America to like 65 or 70. And that didn't have to be. And, you know, it's putting strain. Their debt to deficit, the average country, 100 % debt to deficit, 3.5 % deficits, debt to GDP, I meant, 3.5 % deficits, very high social costs. I'm not against social costs. That's not the point. It's not that sustainable. And what they're talking about here, which they all talk about, But we need growth and investment. And for that, we need innovation.

21:04We've got to change our mindset. What's holding them back? What's holding Europe back? It's all in the Draghi report. Capital markets, unions, changing some work rules, having an investment philosophy. But good news, the innovation here is unbelievable. So if I went 15 years ago to Paris, London, and Berlin, you would not have had as much innovation as you have today. You still have to deal with those other issues. Give us some ideas. Is lower taxes, less regulation? I'm just trying to, what's the magic sauce here? It's a little ball of that. Deregulation is this free one. Almost no one who's had to deal with buying a home, doing construction at home, starting a small business, running a small business, dealing with, anyone will tell you how much it is, how crippling it is, and how it's going to change.

21:49And then here, they've got great universities, but you need to also turn out people who've got skills. It's the skills that matter, not the degree that can do a job. And so we know what to do. education, taxes, growth, innovation, and hopefully the growth will pay for itself. And then when I talk about government expenditures of any type, every government should be saying, do I spend that money wisely? So when I get involved in the United States government, I mean, I can go one after another. There's programs that are virtually corrupt, that money's misused, it's handed to the wrong people, it shouldn't have happened that way.

22:24Governments also have to earn their stripes by saying, I took your money, and here's what I did with it. I totally was going to educate kids. For example, I would ask high schools, community colleges, colleges to judge themselves on what are the income levels of the kids who leave your school and therefore put a huge onus to them to say, okay, I better start to teach coding. And you get 12 weeks of coding and make$75 ,000 a year at 17. And we're just not getting it right. And of course, all the bad policy hurts the lower paid people the most, almost all of them. What next for you? You've been suggested as Treasury Secretary twice, at least twice, to my knowledge.

23:08Bill Ackman, the hedge fund billionaire, begged you to run for president. What are you going to do now? What's next for Jamie Dimon? I don't think either of those things are in the cards. I love what I do. I think I'm proud of J.P. Morgan. and we just don't finance middle market and consumers. We finance states, schools, cities, hospitals, charities, governments, military. We've hired 15 ,000 vets in the United States and quite a few vets here. I'm just proud of the company and this is the perch by which I can do the most to help the world. That's what I do. Obviously, I have to keep Jay Moore and Chase, a healthy, vibrant company.