Connect with us

Finance

JPMorgan Chase is caught in U.S-Russia sanctions war after overseas court orders $440 million seized from bank

Published

on

JPMorgan Chase CEO and Chairman Jamie Dimon gestures as he speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, U.S., December 6, 2023. 

Evelyn Hockstein | Reuters

A Russian court sided with state-run lender VTB Bank in its efforts to recoup $439.5 million from JPMorgan Chase that the American lender froze in U.S. accounts after the Ukraine invasion.

The court ordered the seizure of funds in JPMorgan’s Russian accounts and “movable and immovable property” including the bank’s stake in a Russian subsidiary, according to a court order published Wednesday.

The order came after VTB filed a suit last week in a St. Petersburg arbitration court, seeking to be made whole for funds frozen in the United States, and asking for relief because JPMorgan has said it plans to exit Russia.

The next hearing in the Russian case is July 17.

JPMorgan declined to comment. VTB didn’t immediately respond to a request to comment.

The order was the latest example of American banks getting caught between the demands of Western sanctions regimes and overseas interests. JPMorgan is the biggest U.S. bank by assets and run by veteran CEO Jamie Dimon.  

Two years after Russia invaded Ukraine, the Biden administration has mounted an unprecedented set of sanctions, oil price caps and trade restrictions designed to weaken Moscow’s military machine.

On Wednesday, President Joe Biden signed into law a sweeping foreign aid bill that includes new powers for U.S. officials to locate and seize Russian assets in the United States. It also boosted an ongoing American effort to convince European allies to release Russian state assets to assist Ukraine.

In its own lawsuit against VTB last week in the Southern District of New York, JPMorgan sought to block VTB’s effort, noting that U.S. law prohibits the bank from releasing VTB’s $439.5 million.

This leaves JPMorgan exposed to a nearly half-billion-dollar loss, for abiding by U.S. sanctions.

The American bank, seeking to block VTB’s effort, said the Russian company broke its contractual promise to seek relief in American courts, instead finding a friendlier venue in Russia.

JPMorgan said that Russian courts have enabled similar efforts by Russian lenders against American or European banks at least a half dozen other times.

JPMorgan said it faced “certain and irreparable harm” from VTB’s efforts.

Continue Reading

Finance

TSLA, COIN, STLA, PLTR, CAT and more

Published

on

Continue Reading

Finance

Jamie Dimon says Trump tariffs will boost inflation, slow U.S. economy

Published

on

JPMorgan CEO Jamie Dimon: Trump tariffs will boost inflation, slow an already weakening U.S. economy

JPMorgan Chase CEO Jamie Dimon said Monday that tariffs announced by President Donald Trump last week will likely boost prices on both domestic and imported goods, weighing down a U.S. economy that had already been slowing.

Dimon, 69, addressed the tariff policy Trump announced on April 2 in his annual shareholder letter, which has become a closely read screed on the state of the economy, proposals for the issues facing the U.S. and his take on effective management.

“Whatever you think of the legitimate reasons for the newly announced tariffs – and, of course, there are some – or the long-term effect, good or bad, there are likely to be important short-term effects,” Dimon said. “We are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products.”

“Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth,” he said.

Dimon is the first CEO of a major Wall Street bank to publicly address Trump’s sweeping tariff policy as global markets crash. Though the JPMorgan chairman has often used his platform to highlight geopolitical and financial risks he sees, this year’s letter comes at an unusually turbulent time. Stocks have been in freefall since Trump’s announcement shocked global markets, causing the worst week for U.S. equities since the outbreak of the Covid pandemic in 2020.

His remarks appear to backtrack earlier comments he made in January, when Dimon said that people should “get over” tariff concerns because they were good for national security. At the time, tariff levels being discussed were far lower than what was unveiled last week.

Trump’s tariff policy has created “many uncertainties,” including its impact on global capital flows and the dollar, the impact to corporate profits and the response from trading partners, Dimon said.

“The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse,” he said. “In the short run, I see this as one large additional straw on the camel’s back.”

‘Not so sure’

While the U.S. economy has performed well for the past few years, helped by nearly $11 trillion in government borrowing and spending, it was “already weakening” in recent weeks, even before Trump’s tariff announcement, according to Dimon. Inflation is likely to be stickier than many anticipate, meaning that interest rates could remain elevated even as the economy slows, he added.

“The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and ‘trade wars,’ ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility,” Dimon said.

Dimon also struck a somewhat ominous note considering how much U.S. stocks have already fallen from their recent highs. According to the JPMorgan CEO, both stocks and credit spreads were still potentially too optimistic.

“Markets still seem to be pricing assets with the assumption that we will continue to have a fairly soft landing,” Dimon said. “I am not so sure.”

This story is developing. Please check back for updates.

Continue Reading

Finance

China’s counter tariffs raise the specter of an intense trade war with U.S.

Published

on

China’s and U.S.’ flags are seen printed on paper in this illustration taken January 27, 2022. 

Dado Ruvic | Reuters

BEIJING — Risks of an intense U.S.-China trade war are rising rapidly, according to analysts, after Beijing responded more forcefully than many had expected to U.S. President Donald Trump’s latest tariffs.

In a shift in tone, China also dropped its call for negotiations on trade in a weekend statement that condemned U.S. levies, raising the prospects of an extended period of tariff escalation.

“China has taken and will continue to take resolute measures to safeguard its sovereignty, security, and development interests,” China’s Ministry of Foreign Affairs said in a statement on Saturday.

Beijing on Friday retaliated with levies of 34% on all U.S. goods — matching the latest duties by the Trump administration. Those came on top of the 10-15% tariffs China levied in March and February, which had focused on agricultural and energy products imported from the U.S.

“Raising tariff on all U.S. imports by the same amount as Trump’s latest tariff demonstrates China’s determination to go all the way to wherever the U.S. wants to be,” said Andy Xie, a Shanghai-based independent economist.

As part of the broad retaliatory measures, Beijing also placed export curbs on key rare earth elements, prohibited exports of dual-use items to a dozen of U.S. entities, mostly in defense and aerospace industries, and put 11 more U.S. firms to its “unreliable entities list,” subjecting them to broader restrictions while operating in China.

“Beijing’s aggressive posture signals that future retaliation will be more forceful, setting off an escalatory spiral and raising the odds of unmanaged decoupling in 2025,” a team of analysts at Eurasia Group said in a note.

China’s response will likely prompt further rounds of tariffs from the U.S. in an effort to discourage similar moves from other trading partners, Eurasia Group analysts said, noting that “some Trump officials view this as a unique time to double down on China in an effort to accelerate a decoupling of commercial ties.”

Beijing’s swift response came on the back of Trump’s announcement of additional 34% tariffs on China, raising the U.S. weighted average tariff rate on China to as high as 65%, according to Robin Xing, chief China economist at Morgan Stanley.

That could stunt the world’s second-biggest economy by 1.5 to 2 percentage points this year, Xing estimates, citing slower exports growth and entrenched domestic deflation.

Negotiation standstill

Beijing’s shift toward a more “aggressive, escalatory” stance makes a near-term deal to end the trade war between the two superpowers “highly unlikely,” said economists at Capital Economics.

China is unlikely to use currency as a tool to defend itself against U.S. tariffs, says CIO

Until last Friday, Beijing’s actions were considered relatively restrained and measured. Trump had also made warm comments praising Chinese President Xi Jinping and expressed interests in arranging a bilateral meeting.

“The abandonment of restraint” in Beijing’s latest retaliatory measures likely reflects Chinese leadership’s “diminished hopes for a trade deal with the U.S., at least in the short term,” Gabriel Wildau, managing director at Teneo said in a note.

Trump derided China’s latest response as an act of panic. In a post on social media platform TruthSocial, he said “China played it wrong, they panicked — the one thing they cannot afford to do!” The president has said that he would consider lowering tariffs on China if Beijing approves the sale of short video app TikTok to U.S. investors.

Yet Beijing may not be onboard with the sale. “National dignity is Beijing’s key consideration on TikTok, but exchanging TikTok for relief from newly imposed tariffs would carry the unmistakable whiff of China’s leaders yielding to bullying,” said Wildau.

Analysts at Eurasia Group, however, suggested Beijing still desires a deal and is prepared to negotiate. “Strong, asymmetric, tit-for-tat tariff retaliation is a precondition for Beijing to come to the negotiating table,” they added.

Without ruling out negotiations with the U.S., state-backed publication People’s Daily in an opinion piece said Beijing was “fully prepared in all aspects to handle potential shocks” with ample policy room to defend it economy.

People’s Daily, which is frequently used to convey official policy views, outlined Beijing’s plans to counter the economic fallout by boosting domestic consumption “with extraordinary strength,” lowering key policy rates whenever needed and further fiscal easing.

The diminishing prospect of a deal between Beijing and Washington has exacerbated a global market rout, sending the Hang Seng China Enterprises Index — which tracks Chinese shares listed in Hong Kong — down over 13% Monday, setting it on course for its worst day since the global financial crisis.

The yield on China’s 10-year government bonds plunged 9 basis points to 1.634%, according to LSEG data, while the offshore yuan weakened 0.35% to 7.3212 per dollar.

Continue Reading

Trending