Long Live Ser Jamie

JPMorgan Chase CEO Jamie Dimon is going to stick around for awhile longer.

New York Times:

James Dimon, the chairman and chief executive of JPMorgan Chase, already has outlasted all of his Wall Street peers. On Monday, the bank said he planned to stay in the job for five more years.

Since taking JPMorgan’s helm more than 12 years ago, Mr. Dimon has survived a financial crisis, a monumental trading blowup and throat cancer. These days, he is the closest thing there is to Wall Street royalty.

As a shareholder of JPMorgan, I am delighted to hear this news. Jamie steered through the financial crisis without posting a single losing quarter. And when the Feds begged him to do the Bear Sterns deal, he saw it as both a good thing for his bank as well as for the security of the entire system. Shortly afterward, they sued him into the Stone Age for legacy Bear debts and violations, which he endured like a statesman, eating the fines and pantomiming his way through the settlements. Subsequent episodes like the London Whale and the conflicted financial advice claims against JPMorgan Securities were handled with aplomb.

I know employees of the bank who worship him. Shareholders do too.

A little while back, I had the chance to join a small group of RIA CEOs who were hosted at JPM headquarters by the asset management group for a two-day seminar. The final event was an audience with Jamie, in which he spent well over 90 minutes giving us his take on the state of the world and fielding questions.

He’s an unabashed bull on the United States. Never before, he notes, has there been a nation with such perfect natural border defenses as the Atlantic and Pacific Oceans, and a population made up of the most talented and ambitious people from around the world. He pointed out that the total US economy – including all activity and assets – is a $100 trillion machine and that by 2025, it will be $200 trillion. “JPMorgan will play a substantial role in that growth, you better believe it.”

The bank’s namesake, a relentless optimist himself, would be proud of the person leading his firm today. Here’s a quick story from a hundred years ago that I told in my 2013 post Optimism as a Default Setting:

In the early days of the Twentieth Century, when J.P. Morgan ruled Wall Street, a visitor came to the City. He was a long-time friend of Morgan, a commodity trader from Chicago. He was what might be called a “perma bear” following the Panic of 1907. No matter how high or low the stock market went, his outlook was pessimistic. Another crash, panic and depression were just around the corner.

This was his first visit to thew world’s greatest city. He arrived at 23 Wall Street, and was ushered into J.P.’s spacious office overlooking the Exchange on one side and George Washington’s statue on the other.

They immediately began talking about the markets, Morgan being bullish as ever, and his commodity friend being as bearish as ever. “J.P.,” he said, “the news overseas doesn’t look too good.”

“A buying opportunity!” responded Morgan.

After an hour of friendly disputing about the markets, Morgan invited his guest to join him for lunch. They walked outside and started moving up toward Broadway. As they did so, his friend couldn’t help but admire the skyscrapers that dotted the Manhattan horizon. Morgan gave him a tour of the giant buildings, pointing out the Singer Building, the Woolworth Building across from City Hall, the famous three-sided Flatiron Building, and the recently completed Met Life Tower, rising 50 stories high, the tallest skyscraper in the world at the time.

His friend was duly impressed,. He said he had never seen anything like it, not even in Chicago.

Finally, J.P. Morgan stopped his friend and said, “Funny thing about these skyscrapers – not a single one was built by a bear!”

Dimon took over as CEO after the Bank One merger closed at the end of 2005. Here’s how the stock has done since, compared to the S&P sector SPDR ETF that tracks large financial companies, XLF:

The challenges going forward for the bank – and, by extension, for the whole industry – include a rising rate environment that many employees will not be accustomed to, trade issues with nations around the world, the unwinding of unprecedented monetary stimulus and all of the political crosscurrents that are sure to arise during the 2018 midterms.

I think Dimon is the guy you still want running the show as these issues – plus others we cannot even imagine right now – come to the fore.
The extension of his term is good news.

Soundtrack: 

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