Executives who lead the country’s biggest banks say the economic outlook is worsening. During an investor conference hosted by Bernstein Research on Tuesday, the chief executives of JPMorgan Chase, Wells Fargo and Morgan Stanley sounded pessimistic about the impact of factors like inflation and rising interest rates on growth.
Here are some of their comments.
Jamie Dimon, the chief executive of JPMorgan Chase, warned of a coming storm caused by a combination of “unprecedented” factors: fiscal stimulus during the pandemic, Federal Reserve policy and the war in Ukraine. “It’s a hurricane,” said Mr. Dimon, who leads the nation’s largest lender. “Right now, it’s kind of sunny, things are doing fine. Everyone thinks the Fed can handle this. That hurricane is right out there, down the road, coming our way. We just don’t know if it’s a minor one or superstorm Sandy.” The bank is bracing for turbulence and bad times, he said.
Wells Fargo’s C.E.O., Charles W. Scharf, said that while the economy remained robust, “the question is, how long will that continue?” As the Fed raises interest rates to slow inflation, he said, “we do expect the consumer, and ultimately businesses, to weaken.”
On Wall Street, Morgan Stanley said economic uncertainty would probably weigh on its investment-banking business as demand for mergers, acquisitions and share offerings slowed. “This paradigm shift, at some point, will bring in a new cycle because it’s been so long since we’ve had to consider what a world is like with real interest rates, real cost of capital, that will distinguish winning companies from losing companies,” said Ted Pick, Morgan Stanley’s co-president. Still, its trading arm could benefit from volatile markets as clients rejig their portfolios, he said.
Brian Moynihan, the chief executive of Bank of America, continued to strike a more optimistic note than his peers. Low unemployment, wage growth and robust consumer spending are all “good things,” he said, even though they pose a challenge for Fed policymakers who are trying to keep the economy from overheating. He estimated that investment-banking fees would drop about 50 percent in the second quarter from a year earlier, while trading revenue may climb 10 to 15 percent.