The CEOs of Wall Street's largest investment bank and financial institution held a cautious attitude towards the US economy during the 2024 Q1 earnings conference call.
In their view, inflation and interest rates may decline, and the economy may continue to grow, but at the same time, they warn that stubborn price increases, sustained high borrowing costs, painful economic recessions, and overseas geopolitical conflicts are all threats that cannot be ignored.
Jamie Damon, CEO of JPMorgan Chase
Damon holds a more cautious attitude towards the future.
He said that our current situation is still good, but that doesn't mean we will get better in the future. If the 10-year US Treasury yield rises by 2%, the value of all assets on Earth, including real estate, will drop by 20%. Obviously, this can cause stress and tension. If the situation remains the same, the expectation of a "soft landing" is embedded in the market, and the real estate industry can still muddle through. If an economic recession occurs, it will be difficult for the real estate market to barely sustain itself in a high interest rate environment. Not only for the real estate industry, in this situation, many industries will be very difficult.
Goldman Sachs CEO David Solomon
Solomon noted that while continuing to see headwinds, the US stock market is hovering near record levels.
He stated that these headwinds include concerns about inflation and the commercial real estate market, as well as escalating geopolitical tensions around the world. Although the current environment is still constructive and the market expects a "soft landing" for the US economy, the development trajectory is still uncertain. The combination of the above factors may slow down the growth of the US economy.
Citigroup CEO Jane Fraser
Fraser saw that the overall economic situation this year is de inflationary, and growth in many markets seems to be slowing down.
He believes that regarding geopolitical risks and fragility, I believe the market's risk pricing for some of these factors is too moderate.
BlackRock CEO Larry Fink
Fink believes that there are currently some factors that are causing market fear. Due to fear and uncertainty, there is still a record amount of cash that is still in a wait-and-see state.
Su Shimin, CEO of Blackstone Group
Su Shimin stated that the market environment will still be in a complex state.
He believes that the US economy is stronger than expected, but has started to slow down. Despite the recent slowdown, the inflation rate is expected to show a downward trend this year. As is well known, 2024 is also an important election year, with nearly half of the world's population participating in voting, which also brings unpredictability to the future of important policies affecting the global economy.
Ted Picker, CEO of Morgan Stanley
Pique believes that we are in a period after the financial repression environment.
He said that during this period, we will face a certain degree of inflation and pay more attention to real interest rates. The subsequent development during this period depends on whether interest rates will continue to rise in the context of sustained economic growth in the United States, or whether higher interest rate levels will be maintained for a longer period of time, leading to a difficult landing of the economy. If there is a difficult landing, we will fall into an economic recession, and both the economy and market trends will slow down.
Michael Santo Massimo, CFO of Wells Fargo Bank
Santo Massimo sees that in a higher interest rate environment, customer caution has affected loans, leading to weak loan demand.
He believes that interest rates are expected to fall this year, and election years may also bring some potential uncertainty. Regardless, for deposit levels, changes in interest rate levels, adjustments to quantitative tightening (QT) policies, and changes in overall economic conditions are all important factors.
Boswick, CFO of Bank of America
Boswick said that overall, maintaining interest rates at higher levels for a longer period of time may be a better state for banks.
He believes that the specific impact of high interest rates on banks largely depends on the reasons that lead to high interest rates. If it is because inflation still takes longer to fall before the Federal Reserve officially starts cutting interest rates, then this may be a good environment for banks. "Previously, we mentioned in our financial report that we expect to cut interest rates 6 times this year, but only a quarter has passed and the current market consensus has shifted to 3 rate cuts. All we can do is remain patient and quietly watch 'how this game will proceed'," he said.