Finance

JPMorgan Chase CEO Jamie Dimon said Wednesday that his bank, if ordered by the U.S. government, would exit China, the world’s second-largest economy.
“If the American government makes me leave China, I’m leaving China,” Dimon said at the DealBook Summit.
Growing geopolitical tensions have raised concerns that China could move to annex Taiwan.

JPMorgan Chase CEO Jamie Dimon said Wednesday that his bank would exit China if the U.S. government ordered him to.
“If the American government makes me leave China, I’m leaving China,” Dimon said at the DealBook Summit during a discussion about a potential future conflict over Taiwan. “If there’s a war in Taiwan, you would take all bets off.”

JPMorgan, which says on its website that it has been active in China for a century, does investment and corporate banking, payments and asset management there. Growing geopolitical tensions, fueled by wars in Ukraine and Israel, have raised concerns that China could move to annex Taiwan.
“No one thinks it’s going to happen; it may happen,” Dimon said about war over Taiwan. “That would be really bad for the world and really bad for China.”

Jamie Dimon, chair and CEO of JPMorgan Chase, speaks during the New York Times annual DealBook summit in New York City on Nov. 29, 2023.
Michael M. Santiago | Getty Images

Dimon called relations with China, the world’s second-largest economy, “a very complicated subject” and said that engagement with both China and the U.S. government was necessary.
“I think it’s good for an American bank to be there to help multinationals around the world and China with their own development if it makes sense,” Dimon said. “If for some reason the American government says ‘Nope, can’t do that anymore,’ then so be it.”
Dimon also pointed out that while the U.S. maintains good relations with Mexico and Canada, China has “done a pretty good job angering all the people around them,” and the country has “terrible demographics.”

The bank advises Chinese clients including fast-fashion retailer Shein and Tiktok parent company ByteDance.
Dimon addressed security concerns related to TikTok, saying, “You can imagine the due diligence and work we do to figure out the truth about those things.”
“If some of those people are doing things that we think are truly bad, we would not bank them,” he said.Don’t miss these stories from CNBC PRO: More

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Richmond Fed President Thomas Barkin said he’s not ready to commit to a particular policy path with so much uncertainty in the air.
Barkin called the possibility of easing policy and cutting rates “a forecasting question” that he’s not ready to answer.
Atlanta Fed President Raphael Bostic also offered commentary Wednesday, saying in an essay that he sees economic growth slowing substantially and believes inflation will come down further as well.

Richmond Federal Reserve President Thomas Barkin said Wednesday that policymakers need to retain the option of raising interest rates if inflation doesn’t show enough progress coming down.
Markets largely expect the Fed has stopped raising rates and will start cutting in 2024. But Barkin said he’s not ready to commit to a particular policy path with so much uncertainty in the air.

“If inflation comes down naturally and smoothly, awesome, you know, there’s no particular need to do anything with interest rates if inflation steps down,” he told CNBC’s Steve Liesman during an interview at the CNBC CFO Council Summit.
“But if inflation is going to flare back up, I think you want to have the option of doing more on rates,” Barkin added. “I guess the bigger point is, there’s no precision that anyone can point to at exactly what the level of rates that exactly handles inflation and exactly the way you want to handle it. So you’re constantly trying to adjust on the fly as you learn more about the economy.”
Barkin spoke shortly after the Commerce Department reported that the economy grew at a 5.2% annualized pace in the third quarter. As growth has held strong, inflation is still above the Fed’s 2% annual target, though it has shown a consistent progression lower in recent months. The Fed’s preferred inflation measure of core personal consumption expenditures showed a 12-month rate of 3.7% in September and is expected to show a slightly lower reading in October.
Pricing in futures markets indicates the Fed could cut rates as much as four times, or a full percentage point, next year. Fed Governor Christopher Waller said Tuesday that he’d consider cuts if the inflation data shows progress over the next several months.
However, Barkin called the possibility of easing policy “a forecasting question” that he’s not ready to answer.

“I don’t see it as a there’s a right answer on rates or a wrong answer on rates,” he said, adding that he’s “skeptical” about inflation and thinks it’s going to be “stubborn” ahead.
Atlanta Fed President Raphael Bostic also offered commentary Wednesday, saying in an essay that he sees economic growth slowing substantially and believes inflation will come down further as well.
“Altogether, the research, data, survey results, and input from business contacts tell me that tighter monetary policy and tighter financial conditions more broadly are biting harder into economic activity,” Bostic wrote. “At the same time, I don’t think we’ve seen the full effects of restrictive policy, another reason I think we’ll see further cooling of economic activity and inflation.”
Bostic said his staff expects the inflation rate to decline to 2.5% by the end of 2024 and then get back to the Fed’s 2% target by the end of 2025.
Both Bostic and Barkin will be voters in 2024 on the rate-setting Federal Open Market Committee. More

Deutsche Bank has a considerably bleaker prognosis than market consensus, projecting that Canada will have the highest GDP growth among the G7 in 2024 at just 0.8%.
Goldman Sachs Asset Management economists believe the Fed is unlikely to consider cutting rates next year unless growth slows by substantially more than current projections.
JPMorgan Asset Management strategists echoed this note of caution, claiming that the risk of a U.S. recession was “delayed rather than diminished” as the impact of higher rates feeds through into the economy.

A security guard at the New York Stock Exchange (NYSE) in New York, US, on Tuesday, March 28, 2023.
Victor J. Blue | Bloomberg | Getty Images

With central banks having hiked interest rates at breakneck speed and those rates likely to stay higher for longer while the lagged effects set in, the macroeconomic outlook for 2024 is far from clear.
The International Monetary Fund baseline forecast is for it to slow from 3.5% in 2022 to 3% in 2023 and 2.9% in 2024, well below the historical average of 3.8% between 2000 and 2019, led by a marked slowdown in advanced economies.

The Washington-based institution sees U.S. GDP growth, which has remained surprisingly resilient in the face of over 500 basis points of interest rate hikes since March 2022, to remain among the strongest developed market performers at 2.1% this year and 1.5% next year.
The U.S. economy’s resilience has fueled an emerging consensus that the Federal Reserve will achieve its desired “soft landing,” slowing inflation without tipping the economy into recession.
The market is now largely pricing a peak at the current Fed funds target range of 5.25-5.5%, with interest rate cuts to come next year.
Yet Deutsche Bank’s economists, in a 2024 outlook report published Monday, were quick to point out that monetary policy operates with lags that are “highly uncertain in their timing and impact.”
“With the lagged impact of rate hikes taking effect, we can already see clear signs of data softening. In the U.S., the most recent jobs report showed the highest unemployment rate since January 2022, credit card delinquencies are at 12-year highs, and high yield defaults are comfortably off the lows,” Deutsche’s Head of Global Economics and Thematic Research, Jim Reid, and Group Chief Economist David Folkerts-Landau said in the report.

“At the outer edges of the economy there is obvious stress that is likely to spread in 2024 with rates at these levels. In the Euro Area, Q3 saw a -0.1% decline in GDP, with the economy in a period of stagnation since Autumn 2022 that will likely extend to mid-Summer 2024.”
The German lender has a considerably bleaker prognosis than market consensus, projecting that Canada will have the highest GDP growth among the G7 in 2024 at just 0.8%.
“Although that is still positive and the profile improves through the year, it means the major economies will be more vulnerable to a shock as they work through the lag of this most aggressive hiking cycle for at least four decades,” Reid and Folkerts-Landau said, noting that potential “macro accidents” would be more likely in the aftermath of such rapid tightening.
“We had 10-15 years of zero/negative rates, plus an increase in global central bank balance sheets from around $5 to $30 trillion at the recent peak, and it was only a couple of years ago that most expected ultra-loose policy for much of this decade. So it’s easy to see how bad levered investments could have been made that would be vulnerable to this higher rate regime.”
U.S. regional banks triggered global market panic earlier this year when Silicon Valley Bank and several others collapsed, and Deutsche Bank suggested that some vulnerabilities remain in that sector, along with commercial real estate and private markets, creating “a bit of a race against time.”
‘Higher for longer’ and regional divergence
The prospect of “higher for longer” interest rates has dominated the market outlook in recent months, and Goldman Sachs Asset Management economists believe the Fed is unlikely to consider cutting rates next year unless growth slows by substantially more than current projections.
In the euro zone, weaker growth momentum and a large drag from tighter fiscal policy and lending conditions increase the likelihood that the European Central Bank pauses its monetary policy tightening and potentially pivots toward cuts in the second half of 2024.
“While the Fed and ECB seem to have steered away from a hard landing path during the tightening cycle, exogenous shocks or a premature pivot to policy easing may reignite inflation in a way that requires a recession to force it lower,” GSAM economists said.
“Conversely, further monetary tightening might trigger a downturn just as the effects of prior tightening begin to take hold.”

GSAM also noted regional divergence in the trajectory of growth prospects and inflation patterns, with Japan’s economy surprising positively on the back of resurgent domestic demand driving wage growth and inflation after many years of stagnation, while China’s property market indebtedness and demographic headwinds skew its risks to the downside.
Meanwhile Brazil, Chile, Hungary, Mexico, Peru and Poland were early hikers of interest rates in emerging markets and were among the first to see inflation slow sharply, meaning their central banks have either begun cutting rates or are close to doing so.
“In a desynchronized global cycle, with higher-for-longer rates and slower growth in most advanced economies, the road ahead remains uncertain,” GSAM said, adding that this calls for a “diversified and risk conscious investment approach across public and private markets.”
Recession risk ‘delayed rather than diminished’
In a roundtable event on Tuesday, JPMorgan Asset Management strategists echoed this note of caution, claiming that the risk of a U.S. recession was “delayed rather than diminished” as the impact of higher rates feeds through into the economy.
JPMAM Chief Market Strategist Karen Ward noted that many U.S. households took advantage of 30-year fixed rate mortgages while rates were still around 2.7%, while in the U.K., many shifted to five-year fixed rates during the Covid-19 pandemic, meaning the “passthrough of interest rates is much slower” than previous cycles.
However, she highlighted that U.K. exposure to higher rates is due to rise from about 38% at the end of 2023 to 60% at the end of 2024, while first-time buyers in the U.S. will be exposed to much higher rates and the cost of other consumer debt, such as auto loans, has also risen sharply.
“I think the the key conclusion here is that interest rates do still bite, it’s just taking longer this time around,” she said.

The U.S. consumer has also been spending pent-up savings at a faster rate than European counterparts, Ward highlighted, suggesting this is “one of the reasons why the U.S. has outperformed” so far, along with “incredibly supportive” fiscal policy in the form of major infrastructure programs and post-pandemic support programs.
“All of that fades into next year as well, so the backdrop for the consumer just doesn’t look as strong for us as we go into 2024 that will start to bite a little bit,” she said.
Meanwhile, corporates will over the next few years have to start refinancing at higher interest rates, particularly for high-yield companies.
“So growth slows in 2024, and we still think the risks of a recession are significant, and therefore we’re still pretty cautious about the idea that we’ve been through the worst and we’re looking at an upswing from here on,” Ward said. More

Apple has given Goldman Sachs a proposal to end its credit-card and savings account partnership within the next 12 to 15 months.
The move, if it were to happen, would effectively end one of the highest profile partnerships between a bank and a tech company.

David Solomon, Chairman and CEO, Goldman Sachs, participates in a panel discussion during the annual Milken Institute Global Conference at The Beverly Hilton Hotel on April 29, 2019 in Beverly Hills, California.
Michael Kovac | Getty Images Entertainment | Getty Images

Apple has given Goldman Sachs a proposal to end its credit-card and savings account partnership within the next 12 to 15 months, a person familiar with the matter told CNBC’s Leslie Picker.
The move, if it were to happen, would effectively end one of the highest profile partnerships between a bank and a tech company.

It would also mean that Apple would need to find a new financial partner for its popular credit card, Apple Card, and its high-yield savings accounts under the Apple brand. While Apple offers both its credit card and savings account through the wallet app on iPhones, the banking backend is handled by Goldman Sachs.
When Apple first launched the Apple Card in 2019, Goldman Sachs CEO David Solomon was in attendance at a glitzy Apple launch event at its California campus.
But the partnership has been rocky in recent years as Goldman Sachs, under CEO David Solomon, has retreated from its previous consumer banking ambitions as costs stacked up. Goldman has also faced scrutiny from regulators into how it handles refunds and billing errors, and over alleged gender discrimination when determining credit limits.
Earlier this year, Goldman Sachs said that it would “consider strategic alternatives” for its consumer banking business.
For Apple, the credit card and savings accounts are a way to add value and additional features to its iPhone, as well as bolster its quickly growing services business with fees. It’s not clear whether Apple has found a new partner or would consider bigger changes to its financial products if it were to exit the agreement with Goldman Sachs.

“Apple and Goldman Sachs are focused on providing an incredible experience for our customers to help them lead healthier financial lives,” an Apple representative told CNBC. “The award-winning Apple Card has seen a great reception from consumers, and we will continue to innovate and deliver the best tools and services for them.”
The proposal from Apple was previously reported by the Wall Street Journal. A Goldman Sachs representative declined to comment.
CNBC’s Leslie Picker and Steve Kovach contributed to this story. More

Charlie Munger at Berkshire Hathaway’s annual meeting in Los Angeles California. May 1, 2021.
Gerard Miller | CNBC

Charlie Munger, Warren Buffett’s righthand man for nearly six decades, was a shrewd investment genius in his own right, passing on rich investing wisdom for generations of investors to learn from.
Buffett, who studied under fabled father of value investing Benjamin Graham at Columbia University after World War II, developed an extraordinary knack for picking cheap stocks. However, it was Munger who broadened his approach to focus on quality companies, enabling Berkshire Hathaway to grow into an insurance, railroad and consumer goods conglomerate.

One of the best examples was Berkshire’s acquisition of See’s Candies in 1972 under Munger’s influence, at a price way higher than Buffett was comfortable at paying for businesses.
“It’s not that much fun to buy a business where you really hope this sucker liquidates before it goes broke,” Munger said in 1998.
Say no to diversification
Unlike the investing philosophy in most textbooks, Munger didn’t believe in diversification, or mixing a wide variety of investments within a portfolio, to lower risk. In fact, the Berkshire vice chairman called it “insane” to teach that one has to diversify when investing in common stocks.
“One of the inane things that’s taught in modern university education is that a vast diversification is absolutely mandatory in investing in common stocks …That is an insane idea,” Munger said in Berkshire’s meeting this year.
“It’s not that easy to have a vast plethora of good opportunities that are easily identified. And if you’ve only got three, I’d rather be in my best ideas instead of my worst,” Munger said.

Know your strength
Much like Buffett’s theory about the “circle of competence,” Munger believed that savvy investors should focus on areas within their expertise and strength in order to avoid mistakes.
“We’re not so smart, but we kind of know where the edge of our smartness is … That is a very important part of practical intelligence,” Munger said.
Munger particularly valued the power of strong brands and loyal customers. He said one of the best investments of his life was Costco Wholesale Corp., which he had invested in before the retailer merged with Price Club in 1993.
“I have a friend who says the first rule of fishing is to fish where the fish are. The second rule of fishing is to never forget the first rule. We’ve gotten good at fishing where the fish are,” the then-93-year-old Munger told the thousands of people at Berkshire’s 2017 meeting.
Big money is in the ‘waiting’
The investing sage believed that in investing, it pays to wait. Munger thought that the key to stock-picking success is sometimes doing nothing for years and pulling the trigger with “aggression” when it’s time.
“The big money is not in the buying and selling, but in the waiting,” Munger once said. He added he liked the word “assiduity” because “it means sit down on your ass until you do it.”
Virtue of sitting on sidelines
The conglomerate was often questioned about its huge cash war chest and the lack of deals, when interest rates were near zero. Munger often defended Berkshire’s inaction as he always saw the virtue of sitting on the sidelines to wait for a good opportunity.

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Berkshire Hathaway, long term

“There are worse situations than drowning in cash, and sitting, sitting, sitting. I remember when I wasn’t awash cash — and I don’t want to go back, Munger said.
Berkshire’s massive cash pile is now earning the firm a substantial return with short-term rates topping 5%.
Crypto hater
Munger was a longtime cryptocurrency skeptic, and he never minced words when it came to his critique. He said digital currencies are a malicious combination of fraud and delusion.
“I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air,” Munger said in 2021.
He also called bitcoin a “turd,” “worthless, artificial gold” and that trading digital tokens is “just dementia.”
Munger was also against commission-free trading apps that often facilitate momentum-driven trading activity by amateur investors, such as the meme stock mania in 2021. More

Warren Buffett and Charlie Munger at Berkshire Hathaway shareholder meeting, April 30, 2022.

Berkshire Hathaway Vice Chairman Charlie Munger, who died Tuesday at age 99, once offered what turned out to be sage advice to his buddy and investment legend Warren Buffett: live life backwards.
Munger years ago told the somewhat younger Buffett, 93, how he should live his life, according to CNBC’s Becky Quick, speaking on CNBC’s “Closing Bell: Overtime.” Munger told Buffett, “he should write his obituary the way he wants it written, and then live his life accordingly,” Quick said. “Look at things, and live backwards.”

In a recent, unaired interview conducted earlier in November, Munger told Quick “it’s not a bad idea” to start at the end. “I’ve written my obituary the way I’ve lived my life, and if you want to pay attention to it, it’s alright with me. And if they want to ignore it, that’s OK with me too. I’ll be dead.”
Philosophizing on the vagaries of advanced age, Munger said, “I am very good at recognizing unfair advantages, and I got unfair advantages in old age the same way I got unfair advantages in non old age. And when they came, I just grabbed them: boom, boom, boom.” More

“I did not think we’d ever have … so many hundreds of billions in Berkshire,” Munger, the former vice chairman of Berkshire, said in his final interview with CNBC’s Becky Quick.
“It was an amazing occurrence,” said Munger.

Today, Berkshire Hathaway is massive conglomerate worth north of $785 billion with businesses and investments all around the world. This exceeded Charlie Munger’s wildest dreams.
“I did not think we’d ever have … so many hundreds of billions in Berkshire,” Munger, the former vice chairman of Berkshire, said in his final interview with CNBC’s Becky Quick just a few weeks before passing away at the age of 99. “I did not anticipate … we would ever get to $100 billion, much less several hundred billion.”

“It was an amazing occurrence,” said Munger in bits of the interview aired by CNBC on Tuesday evening.
Among Berkshire’s biggest investments in public companies are Apple and American Express. The company also counts freight rail operator BNSF, insurance giant Geico and See’s Candies.
Munger attributed the success of he and Buffett, 93, to two reasons. “We got a little less crazy than most people. That really helped us. In addition, we were given much longer time to run than most people, because something kept us alive in our 90s. That gave us a long track from our fiddling start all the way to the 90s.”

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Berkshire Hathaway, long term

He also noted both he and Buffett became wiser as they got older.
“We got into better and better companies, and we understood more of the bad things that can happen, and how easily they can creep in,” he said. More

Charlie Munger made a fortune on his own before becoming vice chairman of Warren Buffett’s Berkshire Hathaway.
He also was a real estate attorney, philanthropist and architect.
“We think so much alike that it’s spooky,” Buffett once said of Munger.

Billionaire Charlie Munger, the investing sage who made a fortune even before he became Warren Buffett’s right-hand man at Berkshire Hathaway, has died at age 99.
Munger died Tuesday, according to a press release from Berkshire Hathaway. The conglomerate said it was advised by members of Munger’s family that he peacefully died this morning at a California hospital. He would have turned 100 on New Year’s Day.

“Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation,” Buffett said in a statement.
In addition to being Berkshire vice chairman, Munger was a real estate attorney, chairman and publisher of the Daily Journal Corp., a member of the Costco board, a philanthropist and an architect.
In early 2023, his fortune was estimated at $2.3 billion — a jaw-dropping amount for many people but vastly smaller than Buffett’s unfathomable fortune, which is estimated at more than $100 billion.
During Berkshire’s 2021 annual shareholder meeting, the then-97-year-old Munger apparently inadvertently revealed a well-guarded secret: that Vice Chairman Greg Abel “will keep the culture” after the Buffett era.

Munger, who wore thick glasses, had lost his left eye after complications from cataract surgery in 1980.

Munger was chairman and CEO of Wesco Financial from 1984 to 2011, when Buffett’s Berkshire purchased the remaining shares of the Pasadena, California-based insurance and investment company it did not own.
Buffett credited Munger with broadening his investment strategy from favoring troubled companies at low prices in hopes of getting a profit to focusing on higher-quality but underpriced companies.
An early example of the shift was illustrated in 1972 by Munger’s ability to persuade Buffett to sign off on Berkshire’s purchase of See’s Candies for $25 million even though the California candy maker had annual pretax earnings of only about $4 million. It has since produced more than $2 billion in sales for Berkshire.
“He weaned me away from the idea of buying very so-so companies at very cheap prices, knowing that there was some small profit in it, and looking for some really wonderful businesses that we could buy in fair prices,” Buffett told CNBC in May 2016.
Or as Munger put it at the 1998 Berkshire shareholder meeting: “It’s not that much fun to buy a business where you really hope this sucker liquidates before it goes broke.”
Munger was often the straight man to Buffett’s jovial commentaries. “I have nothing to add,” he would say after one of Buffett’s loquacious responses to questions at Berkshire annual meetings in Omaha, Nebraska. But like his friend and colleague, Munger was a font of wisdom in investing, and in life. And like one of his heroes, Benjamin Franklin, Munger’s insight didn’t lack humor.
“I have a friend who says the first rule of fishing is to fish where the fish are. The second rule of fishing is to never forget the first rule. We’ve gotten good at fishing where the fish are,” the then-93-year-old Munger told the thousands of people at Berkshire’s 2017 meeting.
He believed in what he called the “lollapalooza effect,” in which a confluence of factors merged to drive investment psychology.

A son of the heartland

Charles Thomas Munger was born in Omaha on Jan. 1, 1924. His father, Alfred, was a lawyer, and his mother, Florence “Toody,” was from an affluent family. Like Warren, Munger worked at Buffett’s grandfather’s grocery store as a youth, but the two future joined-at-the-hip partners didn’t meet until years later.
At 17, Munger left Omaha for the University of Michigan. Two years later, in 1943, he enlisted in the Army Air Corps, according to Janet Lowe’s 2003 biography “Damn Right!”
The military sent him to the California Institute of Technology in Pasadena to study meteorology. In California, he fell in love with his sister’s roommate at Scripps College, Nancy Huggins, and married her in 1945. Although he never completed his undergraduate degree, Munger graduated magna cum laude from Harvard Law School in 1948, and the couple moved back to California, where he practiced real estate law. He founded the law firm Munger, Tolles & Olson in 1962 and focused on managing investments at the hedge fund Wheeler, Munger & Co., which he also founded that year.
“I’m proud of being an Omaha boy,” Munger said in a 2017 interview with Dean Scott Derue of the Michigan Ross Business School. “I sometimes use the old saying, ‘They got the boy out of Omaha but they never got Omaha out of the boy.’ All those old-fashioned values — family comes first; be in a position so that you can help others when troubles come; prudent, sensible; moral duty to be reasonable [is] more important than anything else — more important than being rich, more important than being important — an absolute moral duty.”
In California, he partnered with Franklin Otis Booth, a member of the founding family of the Los Angeles Times, in real estate. One of their early developments turned out to be a lucrative condo project on Booth’s grandfather’s property in Pasadena. (Booth, who died in 2008, had been introduced to Buffett by Munger in 1963 and became one of Berkshire’s largest investors.)
“I had five real estate projects,” Munger told Derue. “I did both side by side for a few years, and in a very few years, I had $3 million — $4 million.”
Munger closed the hedge fund in 1975. Three years later, he became vice chairman of Berkshire Hathaway.

‘We think so much alike that it’s spooky’

In 1959, at age 35, Munger returned to Omaha to close his late father’s legal practice. That’s when he was introduced to the then-29-year-old Buffett by one of Buffett’s investor clients. The two hit it off and stayed in contact despite living half a continent away from each other.
“We think so much alike that it’s spooky,” Buffett recalled in an interview with the Omaha World-Herald in 1977. “He’s as smart and as high-grade a guy as I’ve ever run into.” More