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Bank Chiefs Warn of a Weakening Economy

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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 concerning the impact of things like inflation and rising rates of interest on growth.

Listed here are a few of their comments.

  • Jamie Dimon, the chief executive of JPMorgan Chase, warned of a coming storm attributable to a mixture of “unprecedented” aspects: fiscal stimulus through the pandemic, Federal Reserve policy and the war in Ukraine. “It’s a hurricane,” said Mr. Dimon, who leads the nation’s largest lender. “Immediately, it’s type of sunny, things are doing wonderful. Everyone thinks the Fed can handle this. That hurricane is correct on the market, 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 query is, how long will that proceed?” Because the Fed raises rates of interest to slow inflation, he said, “we do expect the patron, 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, sooner or later, will usher in a latest cycle since it’s been so long since we’ve had to think about what a world is like with real rates of interest, real cost of capital, that can distinguish winning corporations from losing corporations,” said Ted Pick, Morgan Stanley’s co-president. Still, its trading arm may 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, despite the fact that they pose a challenge for Fed policymakers who try to maintain the economy from overheating. He estimated that investment-banking fees would drop about 50 percent within the second quarter from a 12 months earlier, while trading revenue may climb 10 to fifteen percent.

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