These are edited excerpts of the interview.
Q: It has been exactly 11 months since we last spoke. And the news flow has been tremendous, ups and downs and whatnot. But I want to start with India and the US. When we last spoke, and I think even two quarters back, the expectation was that India would be the first in line to get a deal. It would perhaps be a favourable deal as compared to some of the other competitor exporting countries. It’s been exactly the opposite. What do you make of it?A: First, I want to say you have to come to India to be on CNBC-TV18. But this conference has gone from a small conference to almost 1,000 people and 200 companies. We’ve seen enormous growth in India. And we’re very optimistic about India in a million different ways. And the President and your Prime Minister clearly like each other, which I think is good. I don’t know what derailed it. I do think the Russian oil has been part of it. So, I would take the President’s word on that. I’m still optimistic. In fact, I think Scott Bessent recently said, “No, no, we’re going to get something done with India.” And I hope we do. It will be very important.
Q: How will this work out? Because the Indian side has been very clear. I’m not asking you exactly what happens, but there has to be an off ramp, right, to knock those 25% off, and then maybe work down the remaining 25% as well?
A: I literally am not involved in negotiations. I don’t know. I do think that they want to do something on the American side, and they want to do something on the Indian side. And so I’m hoping that they resolve it intelligently. It would be good for both parties. India is a great friend of America. It should be. I know it’s non-aligned, and it should stay non-aligned, but with that non-alignment, we should be their best friend.
Q: H-1B, which is the big talking point, and it’s now sort of going into services as well, which so far it was not. It was mostly about goods. So is it expanding, or do you think this is also all part of the negotiation, and it will finally settle down?
A: I think it will finally settle down. That caught everyone off guard, and so we had a lot of phone calls over the weekend. What does it mean? And from what I understand, it means new H-1B visas and a lot of H-1Bs go there because they need the expertise. And so I’m sure a lot of people will be going to the American government explaining why we believe in it. I believe in merit-based immigration.
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As a matter of fact, I would beg the President, if he has accomplished border control, that’s great. All nations want real border control because that helps make a nation, but after that, we should have good immigration. And I’ve heard him say publicly, more merit-based immigration, good seasonal workers stay, and that if you get a degree in America, we should just stamp a green card on it. I agree with those kinds of things. And so we’ll hopefully be engaged with the government on this, too.
Q: During President Trump’s first term as well, a lot of industry bodies went and sort of lobbied. There were lawsuits, etc., and a fair bit of pushback. Do you think there will be pushback this time as well about services and H-1Bs?
A: I wouldn’t combine the two, because services are different from H-1Bs. There’s some pushback on the H-1Bs. And I haven’t spoken to them about it, and I was basically flying over here when I heard about it, so we’ll see.
Q: The other thing is the Hiring Incentives to Restore Employment Act (HIRE Act), right? Which, again, is in the Senate. We don’t know if this goes through or not, but it proposes a 25% tax on offshoring or the global capability centres. JP Morgan has a large presence here, but it’s not so much about JP Morgan’s business here. But how do you think about that?
A: I have heard about that act. I don’t know about it. Trade is a very complicated thing, and I hope we get it right. There’s been a lot of negotiations since then. Secretary Bessent, Secretary Lutnick, and the President have been engaged in it. They’ve come to more reasonable positions. So, look, we’re great believers in trade. If there’s a trade that needs to be fixed for national security, it should be fixed. And if there’s something terribly unfair, it should be fixed. There is unfair trade. Sometimes it’s non-tariff barriers, sometimes it’s quotas, sometimes it’s tariffs themselves, but this one I’m not completely aware of. We provide a lot of services to other countries too.
Q: But your broad view is you should look at these things as a transient phase and that it will settle down?
A: I really don’t know. I hope so.
Q: Let us talk about the US. How has your view changed?
A: The most important thing to me is that the Western world stays strong, both militarily and economically and together. It’s a free and democratic society, and that is the most important thing. And to me, when I’m looking at trade, I would incorporate that in my thinking, to keep the Western world together economically.
Q: Let’s talk about the US. A lot of economists were saying that a recession would come in the second half, but it hasn’t happened. High-frequency data are still coming in very strong, combined with maybe the loosest financial conditions we’ve had in a while. Just share your thoughts about how you’re looking at the US right now.
A: There’s a lot of conflicting data. Data itself is not perfect. But right now, unemployment is still low. Consumers, both at the low end and the higher end, are spending their money. At the low end, they’re clearly a little stretched, and credit losses are going up a little bit. So, it’s not a disaster. It’s a weakening. I don’t know whether that’s just a weakened economy or not. You have a lot of stimulus coming in with the tax package, and a lot of, I’m not going to call it stimulus, but spending on AI, so a lot of capex is up. It’s almost all AI data centre-related.
I hope it continues, and I’m a little more cautious on inflation than people. That may not go away so quickly because of the global deficits around the world. Those have an inflationary effect, the remilitarisation of the world, the restructuring of trade, those things are all kind of inflationary. And maybe, less immigration to the United States could help push up wages in the United States a little bit, which is not all bad, because a lot of people deserve a wage increase.
Q: You’ve always warned the world about very high deficits, especially in America, fiscal deficits in America. As estimates of tariff intake come in, hundreds of billions of dollars, depending on who you ask, are you a little more sanguine about where this is going? The direction of travel about deficits in America?
A: In the short run. Look, I’m a free trade guy, so I’m hoping that, other than unfair trade and national security, and I hear that from a lot of people, the administration and the current numbers have, the tariffs may collect $400 billion or so. But the one big, beautiful bill has a lot of stimulus coming next year, which is good, an offset, and deregulation. Like in America, like in India, the regulations around the world have slowed down investment permitting and building things. Anyone you talk to in any industry will tell you it’s almost longer to get permits and fight litigation than it is to build what you’re trying to build.
So, I do think it’s a positive. So, we need a growth strategy. America and every country must ask how they are going to grow. Growth is what allows you to pay taxes and pay your social safety nets, which means you need jobs, you need business. And it’s good that they’re pushing that. Too many governments were not pushing that. Other than that, the deficit is going to have to come down one day. Growth is one way of getting it down. But, eventually, we have to have a Simpson-Bowles type of thing to make more rational decisions about the deficit.
Q: The direction has changed, in that sense, before this administration came in, compared to where we were earlier, where we were going.
A: More growth, more pro-growth, but we haven’t really attacked the fiscal deficit problem yet. Growth will do some of that. I don’t know if it will do all of it.
And this is global. This is like every nation on the planet. Everyone’s got very high debt levels, too. I don’t know when that becomes a problem. I can give you a logical argument that it can become a problem in six months. I can give you a logical argument that it might be six years, but it will become a problem. And like most problems, you’re better off dealing with the problem than letting it happen. And so, I hope we are a little more thoughtful about that.Also Read | Exclusive: Gold prices heading into ‘bubble’ territory, says JPMorgan’s Jamie Dimon
Q: The Fed, what’s your sense? We’ve seen a cut. Is this a one-off, in your opinion, or the start of an easing cycle?
A: People focus too much on 25 basis points. I don’t know yet. If inflation does not go away, it’s going to be hard for the Fed to cut more. And inflation seems a little bit stuck at 3% again. I give you some margin – it’s going to go up, not down. And, if we go into a recession, and that’s why rates are being cut, that’s not good either. So, hopefully you can have decent growth, and maybe rates come down a little bit, but we’ll see.
Q: You weighed in strongly in support of the Fed when we had officials from the executive making comments and sort of attacking the Fed, asking them to cut, etc. You think that’s kind of eased off a little bit? Or how do you see this story?
A: I’ve always said that there’s no American president who ever said, I want higher rates. So, they want short rates. President Trump came out and said, I believe in an independent Fed. He’s quite strong about his opinions, but being independent is an important thing. The Fed is not independent in other matters – supervisory, regulatory. There was too much of that, and they should have had their ears cut back a little bit. But look, hopefully, we’ll pick a good Fed chair. Some of the names are quite good. I don’t want to go through each one, and we’ll see.
The Fed sets rates and all that. But I remind people, when short rates, when inflation went up, they followed inflation. So, they’re a follower. They don’t determine all these things. They have to react to these things, and so we’ll see.
Q: Apart from inflation, do you foresee any problems in the US to which the Fed should respond? People keep bringing up private credit markets and all sorts of things. You think there’s any reason to worry about the Fed needing to pay attention enough to start – is that something we should worry about?
A: I think they should stick to their knitting. I do think that which is unemployment, interest rates, and inflation. When you talk about systemic stuff, they should anticipate certain things. So, if a government comes out and says, We will spend another trillion dollars, they should incorporate that in, quote, their data, but it’s hard to incorporate. I don’t think there’s a systemic thing that they should be incorporating today. If we have a recession, you’ll see, as we always do, a credit cycle, and it could be a little bit worse than a normal one, possibly.
Q: The weaker dollar, if I may put it that way, is the strongest consensus right now. Do you agree?
A: I’m not going to give my opinion on that one. I don’t know. I’ll let our traders figure that out.
Q: You don’t feel strongly about it one way or the other?
A: No. Most Americans don’t pay as much attention to the dollar as people outside the United States. But I think there are, all things being equal – and they never are – you want a stronger dollar because it generally means a stronger economy. But now tariffs, trade, and all these other things have some counter effects. And some people are reducing their US dollar investments, which I expect will continue over time. So that adds to a little bit of the weakness of the dollar, and there are a lot of people in the United States who like the weaker dollar because it’s good for trade. So we will see.
Q: Any view on what’s happening with gold, precious metals, $1,000 per ounce in 2008, $2,000 per ounce in 2020, and now closing in on $4000 per ounce?
A: We’ll see. No, there’s a lot of – we’re getting into bubble stuff here. And I’m not saying I don’t know where we are, but there’s a lot of positive sentiment out there driving a lot of asset prices. Highest stock prices ever, highest gold ever, highest crypto ever.
Q: What are your thoughts because with crypto, a lot of people say, well, here’s a US administration which is trying to mainstream it in terms of getting this into the financial system. You have warned us of it?
A: Separate Bitcoin from crypto. Blockchain is real. We’ve been using it for years. You can move a JPMorgan coin, a token. Stablecoin will probably be real. We’re doing it too. The banks are looking at whether they should have a consortium or do it themselves. A stablecoin, if it’s like a mutual fund, probably needs rules like a mutual fund, and I can send you a token, but you’re probably going to say to me, Just give me my money. I’ll invest where I want, and it can’t pay interest – whereas a JPMorgan coin could pay interest. So I do think there’ll be people who want to own dollars through a stablecoin outside the US – from bad guys to good guys to certain countries. We’re probably better off having dollars operating in the banking system, and then for the movement of money, particularly retail, there’ll be a purpose for that. I’m not sure central banks need to use it among themselves. It’ll develop over time. I’m not particularly worried about it, but we should be on top of it and understand it.
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Q: Artificial intelligence (AI) is the other one. Hundreds of billions of dollars are being invested there. You think there is a risk of capital misallocation?
A: AI itself is real. We have 2000 people doing it, 500 use cases. I worry less about large models and small models, or whether the costs go up. I think the costs are coming down. People are putting a lot of money behind it. So, it is real. But in almost every real investment boom you’ve had, people didn’t always do it right. So, when cars boomed, a lot of car companies went bankrupt. When television boomed, a lot of television companies went bankrupt. When the internet boomed, that was real, too. But I remember Level 3 laying enough fibre optic, it took like 15 or 20 years to use it all. So, parts of it may very well be in this kind of bubble thing, but parts aren’t.
But I separate that from the real, and we’re going to be using it for a million different things. So, in my mindset, more than whether it’s being hyped, it’ll develop over time. We’re using large language models and small language models, open-source models and closed models. And whatever works best for our company, our clients, is how we’re going to do it. But it is real, and for the population, it’s going to solve some cancers. It’s going to solve some terrible problems that mankind has, and it may, like every other technology, also get used by bad guys, and we’re already seeing that in a lot of payment systems and cyber, etc.
Q: It’s an unprecedentedly volatile world out there. You have been at the helm of JPMorgan for almost two decades now. For Indian companies that are watching you, boards that are watching you – what are the two or three top things you’d want to tell them about how to navigate through the cycle?
A: Everywhere we do business, we grow and cover more people. Every country has its own population growth, education, raw materials, culture, markets, capital markets, and government rule of law. The rule of law is always, maybe the most important thing for how a country develops. But in terms of running the business, we are here to grow our business in India. Here, we serve 2000 companies.
So, think of it as a lot of local, real Indian companies here, but a lot of multinationals around the world, and we’re just growing in every part of the business over time. And then we navigate the risk. We don’t buy and sell the company like it’s a stock. So, we can handle low rates, high rates, and stagflation. We can serve India. We can serve our clients. We can serve our shareholders well over time and manage that.
But the biggest thing in my mind is to keep the Western world safe and free, and that’s going to take a lot on the part of America and all of our allies to make sure we do that militarily and economically. That, to me, is the most important thing. Nothing compares to that – not a recession, not Bitcoin, not anything. And, that’s more long-term strategic than what happens to the economy this year.
Q: But I would imagine, compared to about a year ago, a lot of that is now starting to come together. Europe, for example, Germany. People are starting to talk about increased military spending, etc. So that is happening now, and much more compared to where we were last year.
A: Yeah, absolutely correct. There are some good things taking place there, but I don’t want to fragment it. I think America’s military alliances are critical, and some good things are happening.
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