Finance

JPMorgan Chase boosting buybacks after Dimon called stock expensive

Published

4 months ago

January 15, 2025

CEO of Chase Jamie Dimon looks on as he attends the seventh “Choose France Summit”, aiming to attract foreign investors to the country, at the Chateau de Versailles, outside Paris, on May 13, 2024.

Ludovic Marin | Via Reuters

JPMorgan Chase executives said the bank would increase share buybacks so that a mounting pile of tens of billions of dollars in excess cash doesn’t grow further.

Fresh off a record year for profit and revenue, JPMorgan is facing questions over what CFO Jeremy Barnum admitted was a “high-class problem”: the bank has, by some estimates, roughly $35 billion in money that it doesn’t need to satisfy regulators, or what analysts call “excess capital.”

“We would like to not have the excess grow from here,” Barnum told analysts Wednesday. “Given the amount of organic capital generation that we’re producing, it means that — unless we find in the near term, opportunities for organic deployment or otherwise — it means more capital return through buybacks.”

The bank has heard it from investors and analysts who want to know what JPMorgan intends to do with the cash. The biggest American bank by assets has stockpiled earnings in preparation for the Basel 3 regulatory rules that would’ve required more capital, but Wall Street analysts now believe that the incoming Trump administration is likely to propose something far gentler.

Back in May, when the question came up at his bank’s annual investor day, CEO Jamie Dimon bristled at the notion of scaling up purchases of his stock, which was then trading near a 52-week high of $205.88.

“I want to make it really clear, OK? We’re not going to buy back a lot of stock at these prices,” Dimon said at the time.

That’s because the company’s valuation was too rich, even in its own eyes, Dimon said: “Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren’t going to do it.”

The bank’s stock has only appreciated since: A share trades hands for 22% more now than when Dimon made those remarks.

In fending off calls to whittle down its cash pile by more than it deems necessary, JPMorgan has hinted at the risk of rockier times ahead. Since at least 2022, Dimon and others have warned of the possibility of a recession just ahead, but it has yet to arrive, leaving the end of an economic cycle still on the horizon.

Barnum returned to the subject on Wednesday, telling reporters that there was a “tension” between the risks in the economy and high asset prices in the market; the bank therefore had to prepare for a “wide range of scenarios,” he said.

A sharp economic downturn would give the bank the opportunity to deploy more of that estimated $35 billion in excess cash through loans, according to Portales Partners analyst Charles Peabody.

“I think JPMorgan will be disciplined in not pissing away capital,” Peabody said. “The best time to take market share is coming out a recession, because your competitors are somewhat impaired. And I expect he will pull back on buybacks from current levels, despite pressure from shareholders to do more.”

Fairly limited upside on JPMorgan and American Express stocks, says Baird's David George

Finance

China’s April retail sales growth of 5.1% misses expectations as consumption remains a worry

Published

3 hours ago

May 18, 2025

Business Finance News

Citizens are shopping at a supermarket in Nanjing, East China’s Jiangsu province, on March 9, 2024.

Costfoto | Nurphoto | Getty Images

China’s retail sales growth slowed in April, data from the National Bureau of Statistics showed Monday, signaling that consumption remains a worry for the world’s second-largest economy.

Retail sales rose 5.1% from a year earlier in April, missing analysts’ estimates of 5.5% growth, according to a Reuters poll. Sales had grown by 5.9% in the previous month.

Industrial output grew 6.1% year on year in April, stronger than analysts’ expectations for a 5.5% rise, while slowing down from the 7.7% jump in March.

Fixed-asset investment for the first four months this year, which includes property and infrastructure investment, expanded 4.0%, slightly lower than analysts’ expectations for a 4.2% growth in a Reuters poll.

The drag from real estate worsened within fixed asset investment, falling 10.3% for the year as of April.

The urban survey-based unemployment rate in April eased to 5.1% from 5.2% in March.

The data came against the backdrop of trade tensions between China and the U.S.

U.S. President Donald Trump placed tariffs of 145% on imports from China that came into effect in April. Beijing retaliated with tariffs in kind, with 125% levies on American imports.

Trade-war fears have receded after a meeting of U.S. and Chinese trade representatives in Switzerland earlier this month led to a lower set of levies between the world’s two largest economies.

Beijing and Washington agreed to roll back most of the tariffs imposed on each other’s goods for 90 days, allowing some room for further negotiation to reach a more lasting deal.

That prompted a slew of global investment banks to raise their forecasts for China’s economic growth this year while paring back expectations for more proactive stimulus as Beijing strives to reach its growth target of around 5%.

This is breaking news. Please check back later for updates.

Finance

Scott Bessent calls Moody’s a ‘lagging indicator’ after U.S. credit downgrade

Published

14 hours ago

May 18, 2025

Business Finance News

Treasury Secretary Scott Bessent said in an interview on NBC News’ “Meet the Press” that Moody’s Ratings were a “lagging indicator” after the group downgraded the U.S.’ credit rating by a notch from the highest level.

“I think that Moody’s is a lagging indicator,” Bessent said Sunday. “I think that’s what everyone thinks of credit agencies.”

Moody’s said last week that the downgrade from Aaa to Aa1 “reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.”

The treasury secretary asserted that the downgrade was related to the Biden administration’s spending policies, which that administration had touted as investments in priorities, including combatting climate change and increasing health care coverage.

“Just like Sean Duffy said with our air traffic control system, we didn’t get here in the past 100 days,” Bessent continued, referring to the transportation secretary. “It’s the Biden administration and the spending that we have seen over the past four years.”

The U.S. has $36.22 trillion in national debt, according to the Treasury Department. It began growing steadily in the 1980s and continued increasing during both President Donald Trump’s first term and former President Joe Biden’s administration.

Bessent also told moderator Kristen Welker that he spoke on the phone with the CEO of Walmart, Doug McMillon, who the treasury secretary said told him the retail giant would “eat some of the tariffs, just as they did in ’18, ’19 and ’20.”

Walmart CFO John David Rainey previously told CNBC that Walmart would absorb some higher costs related to tariffs. The CFO had also told CNBC separately that he was “concerned” consumers would “start seeing higher prices,” pointing to tariffs.

Trump said in a post to Truth Social last week that Walmart should “eat the tariffs.” Walmart responded, saying the company has “always worked to keep our prices as low as possible and we won’t stop.”

“We’ll keep prices as low as we can for as long as we can given the reality of small retail margins,” the statement continued.

When asked about his conversation, Bessent denied he applied any pressure on Walmart to “eat the tariffs,” noting that he and the CEO “have a very good relationship.”

“I just wanted to hear it from him, rather than second-, third-hand from the press,” Bessent said.

McMillon had said on Walmart’s earnings call that tariffs have put pressure on prices. Bessent argued that companies “have to give the worst case scenario” on the calls.

The White House has said that countries are approaching the administration to negotiate over tariffs. The administration has also announced trade agreements with the United Kingdom and China.

Bessent said on Sunday that he thinks countries that do not negotiate in good faith would see duties return to the rates announced the day the administration unveiled across-the-board tariffs.

“The negotiating leverage that President Trump is talking about here is if you don’t want to negotiate, then it will spring back to the April 2 level,” Bessent said.

Bessent was also asked about Trump saying the administration would accept a luxury jet from Qatar to be used as Air Force One, infuriating Democrats and drawing criticism from some Republicans as well.

The treasury secretary called questions about the $400 million gift an “off ramp for many in the media not to acknowledge what an incredible trip this was,” referring to investment commitments the president received during his trip last week to Saudi Arabia, Qatar and the United Arab Emirates.

“If we go back to your initial question on the Moody’s downgrade, who cares? Qatar doesn’t. Saudi doesn’t. UAE doesn’t,” he said. “They’re all pushing money in.”

When asked for his response to those who argue that the jet sends a message that countries can curry favor with the U.S. by sending gifts, Bessent said that “the gifts are to the American people,” pointing to investment agreements that were unveiled during Trump’s Middle East trip.

Sen. Chris Murphy, D-Conn., criticized Bessent’s comments about the credit downgrade, saying in a separate interview on “Meet the Press.”

“I heard the treasury secretary say that, ‘Who cares about the downgrading of our credit rating from Moody’s?’ That is a big deal,” Murphy said.

“That means that we are likely headed for a recession. That probably means higher interest rates for anybody out there who is trying to start a business or to buy a home,” he continued. “These guys are running the economy recklessly because all they care about is the health of the Mar-a-Lago billionaire class.”