Daniel Pinto, President of JPMorgan Chase, one of the largest financial institutions in the United States, is of the opinion that at present the American economic system is in a stable state and is able to cope with complex external challenges.
The corresponding statement the president of the bank has made during speeches at meetings of the Institute of International Finance in Marrakech, Morocco. At the same time, Daniel Pinto says that the situation inside the American economic system and its ability to resist external challenges may worsen over time since the current historical moment is characterized by global political problems and risks in the financial sphere and manufacturing.
The president of one of the largest financial institutions in the American banking sector says that at present a stable position of consumers is being recorded in the United States. Also, according to him, businesses are currently strong. Daniel Pinto argues that this state of affairs is due to factors such as a high level of savings and reliable finances. But, in his opinion, the situation may worsen, since the external economic environment is under the influence of serious problems.
Mr. Pinto says that the negative consequences of such a circumstance as a high level of inflation, which does not show signs of an imminent decline, may still intensify. Also, the president of JP Morgan said in Marrakech that the increased interest rates are a factor of pressure on the state of affairs in the economic sector of the United States. He did not rule out the possibility of a further increase in this indicator.
Daniel Pinto also noted that there are other factors that exist outside the economic system, but have an impact on this sphere and contain a risk of development in an unforeseen scenario. In this context, he mentioned armed confrontations. Separately, as part of the relevant reasonings, Daniel Pinto noted the difficulties in the relations between the United States and China.
Anne Richards, chief executive Officer of Fidelity International, who also participated in the event in Marrakech, said that the international picture in its current configuration is very, very complex. According to her, the present state of affairs in the space of the geopolitical process is the most difficult that she could imagine for many years.
At the beginning of this year, the American banking sector faced serious stress. The negative situation in this sphere was associated with the collapse of regional creditors. In this chain of negative events, the most notable were the bankruptcies of Silicon Valley Bank and Signature Bank. Anne Richards says that regulators, as part of their efforts to eliminate the risks of a recurrence of such situations, should exercise a high level of caution and avoid taking measures that will have a negative impact on investment opportunities.
The chief executive officer of Fidelity International argues that if higher standards are introduced in the US, designed to prevent any failures in the banking sector, more risk capital will be outside this area. According to her, the potential implementation of this scenario will create a problem.
Anne Richards is of the opinion that minimizing or preventing risks in the banking sector as a process of countering negative probabilities should consist of the practice of using the right tools in times of stress. She also says that in this case, you should focus on solving the system problems of the mentioned sphere. In her opinion, such actions as the introduction of restrictions by mutual funds to manage the outflow of funds are a legitimate way to counteract a short-term crisis. According to her, another tactic will cause funds to be limited in what they can invest in.
Daniel Pinto said that there should be questions about the business models of medium-sized lenders that will be able to ensure the sustainability of financial institutions in this category. First Republic Bank, which JPMorgan acquired in early 2023 after the organization ran into problems with deposits amid large-scale turmoil in the industry, mismanaged its interest rate risk. This was stated by Daniel Pinto in the context of reflections on the importance of a reasonable business model. According to him, improper risk management has formed the opinion of clients and investors about the vulnerability of the bank. He noted that many of the lender’s assets remained intact.
Anne Richards says that during the turmoil in the bond market, it became clear that at present the level of influence of political risks on the financial sphere is much higher than in the recent past. According to her, new realities have replaced the period that she described as the era of centrist political stability. Anne Richards says that the feverish political atmosphere in the United States and Great Britain provoked market fluctuations.
Last year, Daniel Pinto said that the Federal Reserve’s measures to combat inflation are not excessive and was not a supporter of the opinion that it is necessary to stop the policy of raising interest rates or slow down its implementation. That time he stated that the general increase in the cost of goods and services should be driven into the framework, noting that the possible deepening of the recession against the background of these measures should be perceived as a price to be paid.
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