It appears the tariff deal is imploding. According to Bloomberg, countries have concluded that Trump has overplayed his hand. South Korea has backed out of negotiations saying they’re in no rush while Japan apparently blew off a meeting with US trade officials last week. https://x.com/StealthQE4/status/1925060601052643760
..sounds like the markets are a confused lot.
Current situation:
1. Stocks are rising like the trade war is over
2. Gold is rising like the trade war is escalating
3. Yields are rising like the US has avoided a recession
4. Oil prices are falling like the US is entering a recession
5. The US Dollar Index is falling like inflation is gone
6. Bitcoin is rising like inflation is back on the rise
Never a dull moment in this market.
Yesterday, $JPM CEO Jamie Dimon said he believes Wall Street estimates for S&P earnings growth will go to 0% from 12% to start the year as the impact of tariffs work through the economy “which means PE will come down.”
He also said asset prices are “kind of high” and credit spreads are “kind of low.” On tariffs, he said that even after the reprieve that today’s levels were still “pretty extreme” and that investors had an “extraordinary amount of complacency.”
As a reminder, Dimon warned of an economic “hurricane” in June of 2022 before the banking crisis in March of 2023 with 4 firms with $1.7 trillion in assets failing including Credit Suisse. Before the GFC, Dimon said that by late 2006, JPMorgan was already seeing issues in subprime mortgages. In a February 2008 investor presentation, JPM pointed out that mortgages were “imploding at a rate far worse than expected.” Lehman Brothers failed in September of that year.
JPM ended up buying troubled financial institutions during both the Global Financial Crisis and banking crisis in 2023 given Dimon had positioned the firm so well before the issues. Given the S&P closed up yesterday despite the Moody’s downgrade of credit, I am sure many of you will dismiss his comments.
I would point out that with $4.4 Trillion in assets, JPM has more granular data on the health of the US economy than almost anyone. More importantly, Dimon’s correct interpretation of the data is in my opinion better than anyone else’s.
Since Dimon becoming CEO at the end of 2005 through 5/19/25, JPM’s stock return including dividends is up 1012% versus the S&P up 596% and the S&P Financial Services Sector up 199%. And by the way, JPM beats the Nasdaq as well at up 971%.
Dimon has to see things early when trying to position a company with more assets than anyone on the planet. While the stock market may hit new highs in the near-term during this 90 day tariff reprieve for reasons I have discussed before, I continue to believe that the holidays will be a much rougher time for markets.
