WEBVTT - JPMorganChase President Daniel Pinto Talks Economy and Inflation, Competing with Private Credit

0:00:02.520 --> 0:00:07.320
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:07.800 --> 0:00:11.160
<v Speaker 2>Joining us now Daniel Pinzack, JP Morganschase President, Daniel, it's

0:00:11.160 --> 0:00:12.120
<v Speaker 2>got to say you, sir.

0:00:12.440 --> 0:00:14.000
<v Speaker 1>Thank you for inviting me. It's great. Do you hear?

0:00:14.080 --> 0:00:16.079
<v Speaker 2>Do you feel happy? Do you feel lighter now? You

0:00:16.120 --> 0:00:17.520
<v Speaker 2>know you're stepping down and retiring.

0:00:17.720 --> 0:00:19.800
<v Speaker 1>I do a bit. I've been in the company for

0:00:19.840 --> 0:00:24.079
<v Speaker 1>more than four years. I add my contribution to the

0:00:24.120 --> 0:00:26.480
<v Speaker 1>success of the company. The company is in an amazing

0:00:26.520 --> 0:00:29.080
<v Speaker 1>place at the moment. It is the right time to

0:00:29.160 --> 0:00:32.640
<v Speaker 1>embrace an next generation, to work with Jamie and prepare

0:00:32.680 --> 0:00:36.159
<v Speaker 1>the company for the future and his succession. So I

0:00:36.200 --> 0:00:39.760
<v Speaker 1>feel good about the opportunities company gave me my contribution.

0:00:40.159 --> 0:00:44.800
<v Speaker 1>I'm looking forward to a very violence life going forward.

0:00:45.040 --> 0:00:47.000
<v Speaker 3>You are living the life that we all aspired to.

0:00:47.600 --> 0:00:50.040
<v Speaker 3>Why now and what do you expect the next twelve

0:00:50.040 --> 0:00:50.839
<v Speaker 3>to eighteen months.

0:00:50.680 --> 0:00:53.080
<v Speaker 1>To look like? So it's very simple in the next

0:00:53.159 --> 0:00:54.920
<v Speaker 1>This has been planned for a long period of time,

0:00:56.440 --> 0:01:00.400
<v Speaker 1>and now is the time for me to try decision

0:01:00.400 --> 0:01:02.640
<v Speaker 1>in a very, very smooth way. This transition will go

0:01:02.680 --> 0:01:05.679
<v Speaker 1>over a couple of years. I will my job will

0:01:05.720 --> 0:01:11.759
<v Speaker 1>be to help the management team to continue advising Jamie

0:01:11.840 --> 0:01:14.440
<v Speaker 1>and the bard In issues that there is strategic and

0:01:14.480 --> 0:01:18.480
<v Speaker 1>important for JP Morgan and for the future of the company.

0:01:18.600 --> 0:01:20.960
<v Speaker 1>So it is a right time. It is the right

0:01:21.000 --> 0:01:25.120
<v Speaker 1>group that I helped Jamie to build up to. So

0:01:25.760 --> 0:01:28.160
<v Speaker 1>I think that I feel good about where the company

0:01:28.200 --> 0:01:29.080
<v Speaker 1>is and where I am Now.

0:01:29.200 --> 0:01:32.399
<v Speaker 3>You've finish JP Morgan and it's affiliate banks for four

0:01:32.800 --> 0:01:35.800
<v Speaker 3>decades a long time. You've been to a lot of devices.

0:01:35.880 --> 0:01:38.920
<v Speaker 3>You've seen a lot of different cycles of enthusiasm. How

0:01:39.040 --> 0:01:42.680
<v Speaker 3>enthusiastic is the optimism around the dealmaking and some of

0:01:42.680 --> 0:01:45.120
<v Speaker 3>the mergers and acquisitions that could come down the pike.

0:01:45.520 --> 0:01:48.880
<v Speaker 1>I think that is quite anhusiastic. It was twenty four

0:01:49.040 --> 0:01:51.560
<v Speaker 1>was a very good year too, so you think about them.

0:01:51.560 --> 0:01:54.240
<v Speaker 1>An AIL historical average of volumes around four trillion a

0:01:54.360 --> 0:01:59.120
<v Speaker 1>year in twenty three, it was around three point two

0:01:59.240 --> 0:02:02.040
<v Speaker 1>last year three five. We think that this year could

0:02:02.120 --> 0:02:05.360
<v Speaker 1>get to around four trillion, which is historical average. And

0:02:05.440 --> 0:02:08.880
<v Speaker 1>most important, we hope that the timing PARTICU in the

0:02:08.960 --> 0:02:12.359
<v Speaker 1>US to approve transaction is not as long. It's moved

0:02:12.400 --> 0:02:15.880
<v Speaker 1>from twelve six months in the bus to running teen months.

0:02:16.080 --> 0:02:19.000
<v Speaker 1>Hopefully we go back. It's not just to announce new

0:02:19.040 --> 0:02:22.280
<v Speaker 1>yeers also to close new There is an environment is

0:02:22.320 --> 0:02:24.360
<v Speaker 1>said for that. Let's talk about the environment.

0:02:24.480 --> 0:02:26.679
<v Speaker 2>Is it just a regulatory shift that we need or

0:02:26.720 --> 0:02:29.240
<v Speaker 2>do you find that four percent five percent interest rates

0:02:29.240 --> 0:02:30.440
<v Speaker 2>of how people back as well?

0:02:31.800 --> 0:02:34.760
<v Speaker 1>I think that if you think about the US economy

0:02:34.880 --> 0:02:38.120
<v Speaker 1>has grown very well in twenty four over three percent,

0:02:38.280 --> 0:02:42.280
<v Speaker 1>is likely to grow over two percent this year, So

0:02:42.480 --> 0:02:45.880
<v Speaker 1>the environment is good. I think that even that is

0:02:45.919 --> 0:02:49.480
<v Speaker 1>an economy that you don't see and balances that tell

0:02:49.520 --> 0:02:51.760
<v Speaker 1>you that is an economy that is about to go

0:02:51.880 --> 0:02:56.000
<v Speaker 1>into recession. This cycle could continue for a period of time.

0:02:56.080 --> 0:02:58.600
<v Speaker 1>There is plenty of monetization that needs to be done

0:02:58.919 --> 0:03:05.200
<v Speaker 1>in the sponsor space. There is essentially the evaluations in

0:03:05.240 --> 0:03:08.240
<v Speaker 1>the US that are much higher than any other places

0:03:08.760 --> 0:03:14.519
<v Speaker 1>is also incentivizing merging into US companies. So I think

0:03:14.520 --> 0:03:16.040
<v Speaker 1>that it would be a good environment.

0:03:16.360 --> 0:03:18.480
<v Speaker 2>Which way to one bank yesterday who suggested that maybe

0:03:18.520 --> 0:03:20.040
<v Speaker 2>these US companies could go on a bit of a

0:03:20.080 --> 0:03:23.240
<v Speaker 2>shopping spring in places like Europe where valuations were depressed.

0:03:23.639 --> 0:03:26.320
<v Speaker 2>You engaged in any active conversations right now in companies

0:03:26.360 --> 0:03:27.359
<v Speaker 2>looking to do those kind of things.

0:03:27.360 --> 0:03:30.400
<v Speaker 1>So we are always engaged with clients all over the world,

0:03:30.600 --> 0:03:34.600
<v Speaker 1>and there is a lot of optimission everywhere about what

0:03:34.960 --> 0:03:39.760
<v Speaker 1>the US could do. So therefore, yes, there is dialogue.

0:03:39.280 --> 0:03:42.000
<v Speaker 3>Everywhere, so everyone sounds very optimistic. And then you go

0:03:42.080 --> 0:03:44.520
<v Speaker 3>to some of these for as in the evening and

0:03:44.600 --> 0:03:47.320
<v Speaker 3>people say there's a lot of enthusiasm, what actually will

0:03:47.360 --> 0:03:50.680
<v Speaker 3>get done, we're less clear on, just simply because there

0:03:50.760 --> 0:03:53.920
<v Speaker 3>is that question mark to John's point about benchmark rates,

0:03:53.960 --> 0:03:56.440
<v Speaker 3>about the fact that the economy isn't slowing down so much,

0:03:56.480 --> 0:03:58.800
<v Speaker 3>so why would they go any lower? And what happens

0:03:58.840 --> 0:03:59.600
<v Speaker 3>if they go higher?

0:03:59.640 --> 0:04:04.040
<v Speaker 1>Still? Because of that and deficit, I tell you how

0:04:04.080 --> 0:04:06.520
<v Speaker 1>I think about it. When you think about the US economy,

0:04:06.640 --> 0:04:08.920
<v Speaker 1>isn't a good place here, not a balance is. Consumer

0:04:09.360 --> 0:04:11.840
<v Speaker 1>is in a good place, the corporate sector is in

0:04:11.840 --> 0:04:15.120
<v Speaker 1>a good place. Inflation hasn't yet got to the levels

0:04:15.160 --> 0:04:18.000
<v Speaker 1>that it should be, and the deficit is high. And

0:04:18.040 --> 0:04:23.200
<v Speaker 1>then you have policies coming from immigration, policies, started physical

0:04:23.520 --> 0:04:28.719
<v Speaker 1>the policies and others. So at the end, this government

0:04:29.120 --> 0:04:33.480
<v Speaker 1>is about growth. So therefore I hope they will balance

0:04:33.720 --> 0:04:37.800
<v Speaker 1>the implementation of those policies in a way that it

0:04:37.839 --> 0:04:41.760
<v Speaker 1>doesn't either overhit the economy or trigger a recessions so

0:04:42.160 --> 0:04:45.000
<v Speaker 1>I think that the hope is because of that, because

0:04:45.040 --> 0:04:49.000
<v Speaker 1>the economy is in a good place, and certain things

0:04:49.279 --> 0:04:52.600
<v Speaker 1>like rational revelation, I don't like to talk about the revelation.

0:04:53.040 --> 0:04:56.560
<v Speaker 1>Rational revelation in our sector, in any other sector could

0:04:56.600 --> 0:05:01.039
<v Speaker 1>be good for growth, but if things go too far,

0:05:01.279 --> 0:05:03.800
<v Speaker 1>then the fact will have may have to hydrate and

0:05:04.400 --> 0:05:06.520
<v Speaker 1>deal with inflation. Hopefully it doesn't happen.

0:05:06.839 --> 0:05:09.360
<v Speaker 3>I guess what I'm getting at. Some people are asking

0:05:09.680 --> 0:05:13.200
<v Speaker 3>what potentially to rail this optimism? Is there anything that

0:05:13.279 --> 0:05:16.600
<v Speaker 3>you could see derailing this optimism this year at a

0:05:16.640 --> 0:05:19.359
<v Speaker 3>time when people are basically counting on this sort of

0:05:19.800 --> 0:05:23.360
<v Speaker 3>rational regulation or some of the other growth measures.

0:05:23.360 --> 0:05:25.680
<v Speaker 1>It's an extent, is what I said. Like inflation could

0:05:25.720 --> 0:05:29.279
<v Speaker 1>be that economy goes a bit too fast and doesn't

0:05:29.320 --> 0:05:34.120
<v Speaker 1>allow inflation to come down. That geopolitical space is still

0:05:35.600 --> 0:05:38.680
<v Speaker 1>in a challenging place, though there is some signs of

0:05:39.360 --> 0:05:44.480
<v Speaker 1>potential improvement there. And at the end, is like any

0:05:44.480 --> 0:05:46.880
<v Speaker 1>other policy, you can do the right amount, you can

0:05:46.960 --> 0:05:49.960
<v Speaker 1>do too much, too little. Hopefully the right amount, the

0:05:50.040 --> 0:05:52.880
<v Speaker 1>right amount is done in a way that doesn't really

0:05:53.240 --> 0:05:57.120
<v Speaker 1>derail An economy that is not ready for a recession

0:05:57.440 --> 0:05:59.880
<v Speaker 1>is an economy that is ready to continue to go

0:06:00.320 --> 0:06:01.480
<v Speaker 1>at a decent pace.

0:06:01.720 --> 0:06:04.839
<v Speaker 2>Daniel, A lot's changed in your banking career, tremendous amount,

0:06:04.920 --> 0:06:07.159
<v Speaker 2>and now a bunch of alternative asset managers are looking

0:06:07.160 --> 0:06:09.719
<v Speaker 2>for the activity that traditionally was on a bank balance sheet.

0:06:10.080 --> 0:06:11.599
<v Speaker 1>Can you walk us through as.

0:06:11.440 --> 0:06:14.440
<v Speaker 2>You depart, how different banking might look in the years

0:06:14.440 --> 0:06:16.560
<v Speaker 2>ahead compared to when you first started.

0:06:17.240 --> 0:06:21.039
<v Speaker 1>Well, it's very different. I think that is in a

0:06:21.080 --> 0:06:24.480
<v Speaker 1>better place, with more scale, better quality of service, is

0:06:24.520 --> 0:06:27.479
<v Speaker 1>a very quality of products, and a safer industry that

0:06:27.680 --> 0:06:30.120
<v Speaker 1>probably has ever been. I think that if you are

0:06:30.160 --> 0:06:35.240
<v Speaker 1>referring to private credit, I think that banks we've been

0:06:35.279 --> 0:06:37.760
<v Speaker 1>lending for two hundred years and private credit is no

0:06:37.839 --> 0:06:40.880
<v Speaker 1>more than a normal loan. So I think that we

0:06:40.960 --> 0:06:43.359
<v Speaker 1>feel very good and where we are in order to

0:06:43.400 --> 0:06:47.640
<v Speaker 1>compete in that space. And at the end, so what

0:06:47.760 --> 0:06:49.919
<v Speaker 1>is how we're rejected to be able to provide the

0:06:49.960 --> 0:06:53.200
<v Speaker 1>best possible service to a client? So, therefore, what is

0:06:53.240 --> 0:06:55.680
<v Speaker 1>it is in a certain transaction, you will be able

0:06:55.720 --> 0:06:59.440
<v Speaker 1>to offer a syndicative facility or you will be to

0:06:59.480 --> 0:07:03.520
<v Speaker 1>offer that a lending facility. Both markets will tend to

0:07:03.560 --> 0:07:06.599
<v Speaker 1>converge some way or the other, and we are in

0:07:06.600 --> 0:07:09.960
<v Speaker 1>an amazing position to compete because we do have relationship

0:07:10.000 --> 0:07:12.600
<v Speaker 1>with all those clients and we offer them not just

0:07:12.680 --> 0:07:16.920
<v Speaker 1>the loan, We offer them a bunch of activities.

0:07:17.040 --> 0:07:19.560
<v Speaker 2>We saw a relationship developed between Mark Row and Apollo

0:07:19.720 --> 0:07:22.480
<v Speaker 2>and Jane Fraser's City announced the end of last year.

0:07:22.720 --> 0:07:24.680
<v Speaker 2>Are you exploring similar partnerships.

0:07:25.120 --> 0:07:28.160
<v Speaker 1>We have plenty of partnerships, several where we have go

0:07:28.280 --> 0:07:33.120
<v Speaker 1>landing facilities with rather as the managers, and that they

0:07:33.240 --> 0:07:36.920
<v Speaker 1>want to participate in the origination. The issue for all

0:07:36.960 --> 0:07:40.120
<v Speaker 1>these funds at the moment is that they are getting

0:07:40.120 --> 0:07:42.400
<v Speaker 1>a huge amount of influence and they may not be

0:07:42.520 --> 0:07:45.720
<v Speaker 1>enough accests to deploy. So therefore, to have a partnership

0:07:45.760 --> 0:07:48.480
<v Speaker 1>with someone like us, a city or any other to

0:07:48.600 --> 0:07:52.200
<v Speaker 1>be able to participate in the origination of these banks

0:07:52.560 --> 0:07:54.880
<v Speaker 1>is a good thing. We are doing the same, not

0:07:55.560 --> 0:07:57.720
<v Speaker 1>just with one, with as many as we can.

0:07:57.960 --> 0:08:00.360
<v Speaker 3>That kind of dynamic gets people worried. Not to be

0:08:00.400 --> 0:08:01.760
<v Speaker 3>negative Nelly here, but you know.

0:08:02.000 --> 0:08:04.520
<v Speaker 1>Going to worries going forward.

0:08:05.800 --> 0:08:08.840
<v Speaker 4>I realized, Okay, I realized that I'm sounding pretty negative,

0:08:08.920 --> 0:08:11.480
<v Speaker 4>but I'm wondering, given how much the flows have come

0:08:11.520 --> 0:08:14.600
<v Speaker 4>in to the private credit sphere and how they've been

0:08:14.600 --> 0:08:16.120
<v Speaker 4>searching for ways to be deployed.

0:08:16.640 --> 0:08:20.320
<v Speaker 3>Is there anything that makes you nervous within this ecosystem

0:08:20.360 --> 0:08:21.320
<v Speaker 3>that's grown up very.

0:08:21.200 --> 0:08:24.960
<v Speaker 1>Quickly at the moment Now, I think that when you

0:08:25.000 --> 0:08:29.160
<v Speaker 1>look at these funds, they don't have too much leverage.

0:08:29.200 --> 0:08:33.840
<v Speaker 1>Their leverage one one and have times. So from that

0:08:33.960 --> 0:08:37.040
<v Speaker 1>point of view, particularly in the more in the bigger

0:08:37.080 --> 0:08:40.640
<v Speaker 1>space bigger loans, not so much. The only thing that

0:08:41.000 --> 0:08:43.880
<v Speaker 1>made me post and think about it is there it's

0:08:43.920 --> 0:08:47.520
<v Speaker 1>a lot of direct lending going into small business. There

0:08:47.600 --> 0:08:51.000
<v Speaker 1>is a lot of lending going into the smaller side

0:08:51.000 --> 0:08:54.959
<v Speaker 1>of middle markets. And this industry in the current form

0:08:55.400 --> 0:09:00.000
<v Speaker 1>hasn't been tested through a down turn cycle because when

0:09:00.160 --> 0:09:02.680
<v Speaker 1>COVID happen, it was al subsidized by the by the

0:09:02.720 --> 0:09:06.319
<v Speaker 1>different governments. So how these fans are going to behave

0:09:06.679 --> 0:09:09.800
<v Speaker 1>in a downturn with small business is something that you

0:09:10.280 --> 0:09:12.160
<v Speaker 1>want to be concerned about. It you want to keep

0:09:12.200 --> 0:09:14.520
<v Speaker 1>an eye on. But I don't think that there is

0:09:14.559 --> 0:09:18.120
<v Speaker 1>a systemic reissue in this space in the short term.

0:09:18.400 --> 0:09:20.520
<v Speaker 1>The components are not there for that to happen.

0:09:20.679 --> 0:09:22.600
<v Speaker 2>Daniel find a question, how's the golf game?

0:09:23.840 --> 0:09:27.439
<v Speaker 1>It's okay, It's been the terror rage what's awfully what's

0:09:27.440 --> 0:09:30.480
<v Speaker 1>the handicap? Now he has gone from five to eight.

0:09:31.040 --> 0:09:33.559
<v Speaker 1>Hopefully I go back and do it now.

0:09:33.960 --> 0:09:37.120
<v Speaker 2>You appreciate your time, sir, Congratulations on a fantastic career,

0:09:37.240 --> 0:09:39.079
<v Speaker 2>Thank you, thank you, and looking for the come in

0:09:39.120 --> 0:09:39.840
<v Speaker 2>the next twelve months with.

0:09:39.880 --> 0:09:41.160
<v Speaker 1>Each say absolutely thank you.

0:09:41.200 --> 0:09:44.200
<v Speaker 2>Sir. Daniel Pins are there? The President of JP Morgan Shacks.