Bank stocks rose on earnings release today. Leading the pack was JPMorgan, up nearly 3% on the day.
Not missing a beat, JPMorgan’s chief Jamie Dimon was making his rounds, talking up his “book.”
“Talking your book,” is a traders phrase for extolling the market position that will best accommodate your side of the bet – the position that will make you the most amount of money – often with a patronizing tone.
In this case, Dimon was explaining some essential investing concepts… namely that banks make more money when the Fed raises rates.
Jamie Dimon, CEO of JPMorgan Chase “talking his book?” (Source: Steve Jurvetson)
Looking at it one way, yes, Jamie Dimon is making more money. “His bank refuses to move its deposit rate above 0.01%…” writes an opinion piece on Zero Hedge. “…In the process keeping $2.2 trillion in liquidity locked inside the bank for overnight lending.”
Banks make money when rates rise because they can continue to pay its customers – savers – lower rates, while leveraging its rising cash holdings.
But that’s not the most interesting thing Dimon said yesterday. “In a separate – and far more provocative – set of comments made earlier in the day,” Tyler Durden goes on:
Dimon made some extremely outspoken comments you won’t hear on the mainstream media telling a small group of listeners that was closed to the press that the “President of the Unites States needs to stand up and say we may not meet our 2050 climate objectives because this is a fucking war.” He also said “time to stop going hat in hand to Venezuela and Saudi and start pumping more oil & gas in the USA.”
He went on to suggest “investors don’t give a shit” about Environmental, Social, Governance (ESG) corporations, a topic we’ve raised during several Wiggin Sessions of late, “warning not to ‘cede governance to do-gooder kids on a committee’.”
One our favorite quotes from recent Sessions comes from Byron King, a geologist and Harvard trained attorney. Commenting on ESG, King suggested “at some point the adults are going to come back in the room.” Meaning, among other things, Americans will be willing to tap their own natural resources, not just for investment gain, but to power the economy we’ve become accustomed to enjoying.
And perhaps, even leave Europe and Asia to their own devices.
In his address to shareholders, Dimon “stressed the need for strong American leadership that is not being provided by either party. His conclusion: the world needs American diplomacy and neither Trump or Biden can lead the USA.”
Strong words from the CEO of the largest bank in America.
Looking at the following chart, one can reasonably surmise the Fed will be forced to keep up their rate hikes:
So is Dimon for real? Or just “talking his book” in a bull market for banking stocks because everyone likes the numbers? You can write in with your opinion here.
P.S. One of our sponsors, himself a Wall Street stalwart, has a strong opinion on bank stocks and suggests an alternative below.