Dimon’s Message To Shareholders

JPMorgan Chase’s Chairman and CEO Jamie Dimon released his annual letter to shareholders today. Let’s dive into some of the key takeaways.

As should be expected from a bank CEO, the letter addressed the current banking crisis. 🏦

Dimon says, “…while the current crisis has exposed some weaknesses in the system, it should not be considered, as I pointed out, anything like what we experienced in 2008.” However, he was careful not to downplay the severity of it, saying, “…the current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come.”

As for JPMorgan and other big banks becoming beneficiaries of the regional bank fallout, Dimon had this to say, “Any crisis that damages Americans’ trust in their banks damages all banks – a fact that was known even before this crisis. While it is true that this bank crisis ‘benefited’ larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd…”

He then called on the government to create a ‘less academic, more collaborative’ regulatory environment that focuses on forward-looking rules. The recent events highlighted that simply satisfying regulatory requirements is insufficient and that managing risk requires constant and vigilant scrutiny. 🤝

Other topics Dimon touched on included climate investments and the rise of artificial intelligence (AI). He noted the need for more urgency to speed up the adoption of these technologies in a sustainable, responsible way. 

A final theme seen throughout the letter was the divisiveness occurring at the geopolitical level and within the U.S. itself. Dimon had this to say, “…This is that moment again, when our country needs to work across public and private sectors to lead while improving American competitiveness — which also means re-establishing the American promise of providing equal access to opportunity for all.”

Overall, the cautious tone that we’ve heard from America’s largest bank over the last year continued. Concerns around the U.S. and global economy remain, but JPMorgan is focused on delivering value for shareholders and working towards a more stable banking system that serves everyone. ⚠️

Moving onto economic data, February’s job openings totaled 9.93 million, down 632,000 from January’s number. It was the first time vacancies fell below 10 million since May 2021, and the current job openings to available workers dropped from nearly 2:1 to 1.7:1. 🧑‍💼

In its battle against inflation, the Federal Reserve has been watching for signs that the labor market is softening. Job openings and initial jobless claims are leading indicators that tend to peak before nonfarm payrolls and other lagging indicators.

So far, neither has offered the Fed much hope. The last time we saw a major drop in this reading was in October, but it quickly recovered. And while the trend is clearly lower over the last year, the number of job openings is still very elevated relative to history. 📝

Meanwhile, U.S. manufacturing activity remains soft. February’s U.S. factory orders fell 0.7%, following January’s 2.1% decline. That was slightly worse than expected, as rising borrowing costs and economic uncertainty continue to weigh on demand. 🏭

The Federal Reserve Bank of Atlanta’s GDPNow estimate fell from 3.1% several weeks ago to 1.7% today. A decline in personal consumption expenditures growth and continued contraction in private domestic investments drove the downtick. 🔻

And finally, the IBD/TIPP poll found that Americans’ outlook on the U.S. economy hit a sixteen-month high in April. The index’s 47.4 reading remains in pessimistic territory for the 20th straight month but is nearing that crossover level at 50. 🔺

Internationally, the Reserve Bank of Australia paused after ten straight rate hikes, leaving its policy rate at 3.6%. Now that it’s reached its potential terminal rate, it will wait to assess how it impacts the economy and inflation. It joins Canada and several other central banks that are putting a pause on further tightening until they receive more data. ⏸️

Nio & Nikola’s Never-Ending Story

No matter the day, there seems to be an endless stream of electric vehicle (EV) industry news. Let’s get into today’s headlines. 📰

First up is China’s Nio, which just received an additional $2.2 billion investment from Abu Dhabi’s CYVN Holdings, which raised its stake to 20.1%. The fund had last invested in Nio during July, with a $1 billion investment. 

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Japan’s Nippon Takes Over U.S. Steel

After months of bidding, U.S. Steel finally has a buyer. However, the auction’s winner has some parties concerned. 🤔

Japan’s Nippon Steel emerged as the top bidder for the 122-year-old steelmaker, beating out offers from Cleveland-Cliffs, ArcelorMittal, and Nucor. Its $55 per share price represents a 142% premium to where $X shares were trading before Cleveland-Cliffs’ $35-per-share offer kicked off the bidding war.

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Trouble Continues For Telecoms

We last talked about Telecom stocks about six months ago, when their stocks came under significant pressure due to slowing growth, competition concerns, and regulatory issues. We then discussed them in October when investors dumped defensive stocks for higher-yielding treasuries with no risk.

Prices have since rebounded sharply with the broader market as investors priced in Fed rate cuts this year. However, Verizon was back in the news today for a not-so-great reason. Let’s dig in. 👇

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Only Some EV-Makers Delivered

Electric vehicle (EV) manufacturers came out with their fourth-quarter delivery numbers today, sending their stocks all over the place. 📊

First, let’s start with everyone’s favorite, Tesla, which delivered mixed news to investors. It managed 1.81 million EV deliveries around the globe in 2023, meeting its full-year guidance and narrowly topping the consensus estimates. That was up 38% YoY but slowed from 2022. 

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