Finance

JPMorgan Chase CEO Jamie Dimon signaled retirement is closer than ever, striking a key change in messaging during the bank’s investor day.
The ambiguity of Dimon’s plans has made succession timing at JPMorgan one of the persistent questions for the bank’s investors and analysts.
Dimon is 68 years old.
“We’re on the way, we’re moving people around,” Dimon said.

Jamie Dimon, Chairman and CEO of JPMorgan Chase, testifies during a Senate Banking Committee hearing at the Hart Senate Office Building on December 06, 2023 in Washington, DC.
Win Mcnamee | Getty Images

Jamie Dimon’s days as CEO of JPMorgan Chase are numbered — though it is unclear by how much.
In a response to a question Monday about the bank’s succession planning, Dimon indicated that his expected tenure is less than five more years. That is a key change from Dimon’s previous responses to succession questions, in which his standard answer had been that retirement was perpetually five years away.

“The timetable isn’t five years anymore,” Dimon said at the New York-based bank’s annual investor meeting.
The ambiguity of Dimon’s plans has made succession timing at JPMorgan one of the persistent questions for the bank’s investors and analysts. Over nearly two decades, Dimon, 68, has made his lender the largest in America by assets, market capitalization and several other measures.
Still, Dimon added Monday that he still has “the energy that I’ve always had” in managing the sprawling company.
The decision of when he moves on will ultimately be up to JPMorgan’s board, Dimon said, and he exhorted investors and analysts to examine the executives who could take his place.
Atop the short list of candidates is Marianne Lake, CEO of JPMorgan’s consumer bank, and Jennifer Piepszak, who co-leads its commercial and investment bank. The executives were given their latest assignments in January.

“We’re on the way, we’re moving people around,” Dimon said.
Even when he steps down as CEO, however, it is likely he will stay on as the bank’s chairman, JPMorgan has said.

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When pressed about the timing of a potential boost to the bank’s share repurchase program, Dimon did not mince words.
“We’re not going to buy back a lot of stock at these prices,” Dimon said.
JPMorgan, the biggest U.S. bank by assets, has seen its shares surge 40% over the past year, reaching a 52-week high of $205.88 on Monday before Dimon’s comments dinged the stock.

Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of Wall Street Firms, in the Hart Building on Dec. 6, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

Jamie Dimon thinks shares of JPMorgan Chase are expensive.
That was the message the bank’s longtime CEO gave analysts Monday during JPMorgan’s annual investor meeting. When pressed about the timing of a potential boost to the bank’s share repurchase program, Dimon did not mince words.

“I want to make it really clear, OK? We’re not going to buy back a lot of stock at these prices,” Dimon said.
JPMorgan, the biggest U.S. bank by assets, has seen its shares surge 40% over the past year, reaching a 52-week high of $205.88 on Monday before Dimon’s comments dinged the stock. That 12-month performance beats other banks, especially smaller firms recovering from the 2023 regional banking crisis.
It also makes the stock relatively pricey as measured by price to tangible book value, a commonly used industry metric. JPMorgan shares traded recently for around 2.4 times book value.

‘A mistake’

“Buying back stock of a financial company greatly in excess of two times tangible book is a mistake,” Dimon said. “We aren’t going to do it.”
Dimon’s comments about his company’s stock, as well as an acknowledgement that he may be nearing retirement, sent the bank’s shares down 4.5% Monday.

To be clear, JPMorgan has been repurchasing its stock under a previously authorized buyback plan. The bank resumed buybacks early last year after taking a pause to build up capital under new expected guidelines.
Dimon’s guidance simply means it is unlikely the program will be boosted anytime soon. JPMorgan is likely to purchase shares at a $2 billion to $2.5 billion quarterly clip, Portales Partners analyst Charles Peabody wrote in a March research note.
The JPMorgan CEO has often resisted pressure from investors and analysts that he deemed short-sighted. When interest rates were low, Dimon kept relatively high levels of cash, rather than plowing funds into low-yielding, long-term bonds. That helped JPMorgan outperform other lenders, including Bank of America, when interest rates jumped higher.

Underappreciated risks

Dimon’s desire to hoard cash is not just because of impending capital rules. On multiple occasions Monday, he said he was “cautiously pessimistic” about economic risks, including those tied to inflation, interest rates, geopolitics and the reversal of the Federal Reserve’s bond-buying programs.
Markets are currently underappreciating those risks, Dimon said. For instance, prices of high-quality corporate bonds do not adequately reflect the potential for financial stress, Dimon said.
“The investment grade credit spread, which is almost the lowest it’s ever been, will be dead wrong,” Dimon said. “It’s just a matter of time.”
Since 2022, Dimon has warned of an economic “hurricane” set off by geopolitical risks and quantitative tightening. While the continued strength of the economy has surprised many on Wall Street, including Dimon, his concerns have informed his decision-making process ever since.
“We’ve been very, very consistent — if the stock goes up, we’ll buy less,” he said Monday. “When it comes down, we’ll buy more.”

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There is only one problem with the chatter about Europe’s “soft landing”: its economy never truly flew. While America’s growth has consistently amazed, Europe’s has been miserable. Exclude Ireland, where national statistics are distorted by multinational companies minimising their tax bills, and the EU’s GDP has risen by about 3% since 2019, compared with a 9% increase in America.Yet Europe’s economic outlook is undoubtedly improving. Data published on May 15th showed that the euro zone grew by 0.3% in the first quarter of this year against the previous quarter. Although a modest rise, this was the first significant growth in six consecutive quarters and enough for the currency bloc to emerge from a recession. The same day the European Commission upgraded its forecasts of EU growth for 2024. “We believe we have turned a corner,” cheered Paolo Gentiloni, a commission official. More

Airline fares from the U.S. have broadly fallen over the past year, according to the consumer price index.
But there are still cities and regions where average prices have gotten more expensive, like flights to Tokyo, Canada, South America, and the Middle East and Africa.
Consider being more flexible with travel plans and book well ahead to reduce spending on airfare. Avoiding checked-bag fees is another way to save.

Coroimage | Moment | Getty Images

Americans traveling this summer have broadly seen prices fall for airline fares, a welcome trend after last year’s sticker shock.
But airfare remains more expensive in 2024 for some regions and destinations, largely for trips abroad, data shows.

For example, an average round-trip flight to Tokyo, Japan — one of the top hot spots for American tourists — costs $1,372 this summer, up 2% from 2023, according to travel site Hopper.
Flights to Canada, South America, and the Middle East and Africa regions are also up 6%, 2% and 1%, respectively, from summer 2023, Hopper found.
Of course, there’s significant variation among the cities and countries of such vast regions and continents.
More from Personal Finance:Some vacationers expect to carry summer travel debtA controversial hack to save on airfare carries ‘super big risk’New Europe travel requirement delayed to 2025
For example, while the price of a round-trip fare to Asia is flat from a year ago, those for certain destinations have soared: by 65% (to $3,196) for an average flight to Sakata, a coastal city in the northeast of Japan; by 42% (to $4,190) to Ipoh, among Malaysia’s biggest cities; and by 35% (to $4,092) to Udon Thani, in Thailand’s northeast, according to Hopper.

High prices to certain Asian cities impact many American tourists since the continent is their second-most frequented international travel destination, Hopper said.
Flights are also up for some major hubs in South America, according to Hopper: by 16% (to $955) to Rio de Janeiro, Brazil; by 34% (to $667) to Lima, Peru; and by 13% (to $826) to Santiago, Chile, for example.
Average fares to Europe, the most popular trip abroad for Americans, are down 8% in summer 2024 versus a year ago, when they were at record highs. But they’re still elevated in some areas like Friedrichshafen and Memmingen, in southern Germany, and Bratislava, Slovakia. Fares there are up 265%, 109% and 99%, respectively.

Travel prices have fallen broadly

Westend61 | Westend61 | Getty Images

“Last year was kind of an extraordinarily expensive year,” said Hayley Berg, lead economist at Hopper.
International travel was especially costly as consumers unleashed pent-up demand to go abroad following Covid-19-related restrictions, many nations reopened their borders to foreign visitors, airlines worked to re-establish their flight schedules and jet fuel prices soared.  
Some of those dynamics haven’t yet unwound for certain areas. Additionally, specific destinations have their own idiosyncratic supply-and-demand factors that have kept prices high.
Overall, though, travelers have gotten broad price relief.
Average airline fares for flights originating in the U.S. fell by 5.8% in the year from April 2023 to April 2024, according to the consumer price index. They’ve declined almost 1% in just the past month.

“Mostly what we’re seeing [now] is tremendous improvement across most routes,” Berg said. “I do expect that to continue.”
However, Americans may feel flight prices are broadly increasing due to certain airline trends like higher fees for checked bags, said Sally French, a travel expert at NerdWallet.
Major carriers including Alaska Airlines, American Airlines, Delta Air Lines, JetBlue Airways and United Airlines raised their checked-bag fees this year, for example.

While those fee hikes are generally $5 more per bag, that can add up, especially for round-trip fares for families, French said.
“It can completely inflate the cost of your trip,” she said.
There are ways to save, though, such as flying with certain airlines, combining bags, or even trying to forgo checking a bag altogether. If you know you’ll have to check a bag, doing so ahead of flight check-in will likely save you money, too.
Booking a flight well ahead — at least one to three months before a domestic trip, and three to four months ahead of international travel — is another way to save on flight costs, French said. Airlines generally don’t reduce airfare at the last minute, unlike many hotels, for example, she said.
Other ways to save include being flexible with travel time — perhaps by visiting a destination during a shoulder season instead of its peak, or flying mid-week instead of around weekends. Don’t forget to use rewards like frequent-flier miles and certain perks like travel insurance offered by some credit cards. More

The U.S. Securities and Exchange Commission is expected to make a key decision on approving ether exchange-traded funds next week.
But it will likely fail due to a lack of an over-arching regulatory framework for all cryptocurrencies, according to Ric Edelman, head of the Digital Assets Council of Financial Professionals.

“I think that there’s going to be another delay, which is frankly, not really bad news,” Edelman told CNBC’s “ETF Edge” this week.
Edelman, an investor and personal finance author, thinks there needs to be an emphasis on regulations to protect people from crypto scams. He notes current laws are more than a half century old and are not built for digital technology.
“Without any cop on the beat, it’s forcing investors to go on their own outside of the investment advisory community because the community can’t help them because we don’t know what the rules are. And they’re ending up in scams and frauds,” he said. “The sad irony is that [SEC Chair Gary] Gensler is claiming to be wanting to protect the consumer. But his refusal to write regulation is actually harming the consumer rather than helping.”
Bitwise Asset Management’s Matt Hougan is also pushing for new rules.
“80-year-old securities laws don’t fit neatly into this world of digital assets, crypto and 21st century technology,” the firm’s chief investment officer said. “Ultimately, I think everyone wants the same thing. They wanted a safe, secure platform where investors are protected, and innovation is protected.”

Hougan notes Bitwise has its own application for a spot ethereum ETF and is hopeful about the future.
“We’ve entered the ETF era for crypto. We’ve seen the bitcoin ETFs come to market. We’ve seen the great things they’ve done for investors — lowering costs, improving regulation, improving sort of safety, security and peace of mind.,” Hougan said. “I think we will get there on ethereum as well.”
The two ether ETF proposals, submitted by VanEck and ARK Investments/21Shares, are set to be approved or denied this month.
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Citing people familiar with the matter, Bloomberg said that “one option an internal team at the Chinese insurance giant is considering is further share sales, similar to the $50 million sale it disclosed last week.”
Ping An has butted heads with HSBC’s management in recent years, most notably supporting a shareholder motion in 2023 that sought to spin off its Asia business and establish fixed dividends.

Customers use automated teller machines (ATM) at an HSBC Holdings Plc bank branch at night in Hong Kong, China, on Saturday, Feb 16, 2019.
Anthony Kwan | Bloomberg | Getty Images

Shares of HSBC Holdings fell over 3% in Hong Kong on Friday after reports that its top shareholder Ping An Insurance might be looking to cut its stake in the British bank.
Despite the fall, HSBC’s share price is still at its highest since August 2018, trading at about 68 Hong Kong dollars per share.

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Citing people familiar with the matter, Bloomberg reported the Chinese insurer is looking at possibly reducing its stake in the bank further “as it seeks to reduce its $13.3 billion position in Europe’s largest lender.”
There are several options including “further share sales, similar to the $50 million sale it disclosed last week.”
Ping An sold HSBC shares worth 391.49 million Hong Kong dollars ($50.19 million) on May 7, cutting its stake from 8.01% to 7.98%.
The sale marked the first disposal of shares from Ping An since it backed a 2023 shareholder motion that sought to spin off its Asia business and establish fixed dividends. That motion was eventually defeated.
“A sovereign wealth fund or ultra-rich investor in the Middle East taking a sizable stake is another possibility,” Bloomberg said, citing unnamed sources. More

Retail sales rose by 2.3% in April from a year ago, the National Bureau of Statistics said.
Industrial production rose by 6.7% in April from a year ago, beating expectations for 5.5% growth.
But fixed asset investment rose by 4.2% for the first four months of the year, lower than the 4.6% expected increase.
China was also scheduled Friday to kick off a six-month program for issuing decades-long bonds to fund strategic projects.

Pictured here is a BYD factory producing new energy-powered trucks in Huai’an, China, on February 21, 2024.
Nurphoto | Nurphoto | Getty Images

BEIJING — China reported data Friday that pointed to slower growth on the consumer side while industrial activity remained robust.
Retail sales rose by 2.3% in April from a year ago, the National Bureau of Statistics said. That was less than the 3.8% increase forecast by a Reuters poll, and slower than the 3.1% pace reported in March.

Industrial production rose by 6.7% in April from a year ago, beating expectations for 5.5% growth. That was also a marked pickup from 4.5% in March.
But fixed asset investment rose by 4.2% for the first four months of the year, lower than the 4.6% expected increase.
Real estate investment steepened its pace of decline, and was down 9.8% year-on-year for the first four months of 2024.
Infrastructure and manufacturing investment during that time both slowed their pace slightly from the level reported as of March.
The urban unemployment rate in April was 5%. The bureau has previously said it would publish the breakdown by age in the days following the overall data release.

Retail sales grew by 6.8% year-on-year during a recent holiday period from April 29 to May 3, according to China’s Ministry of Commerce.
The ministry said retail sales of home appliances rose by 7.9% during that time, while that of automobiles climbed by 4.8%, boosted by nationwide trade-in incentives.
“Major indicators of industry, exports, employment and prices improved overall, with new driving forces maintain[ing] rapid growth,” the bureau said.
Some consumers who are uncertain about their future income and other aspects will remain cautious about spending, said Bruce Pang at JLL.
But he noted that improving employment data and growth in services consumption indicated retail sales could improve down the road.
The statistics bureau said in a statement that the April figures were affected by the May 1 Labor Day holiday and last year’s high base. 
A spokeswoman for the bureau, Liu Aihua, pointed out that last year, the multi-day May 1 Labor Day holiday had included two days in April. This year, the holiday didn’t begin until May 1.
She said the real estate sector remains in a period of adjustment.
China was also scheduled Friday to kick off a six-month program for issuing decades-long bonds to fund strategic projects. Oxford Economics expects the bulk of any economic impact won’t be felt until the first half of next year.
Liu noted the issuance of ultra-long bonds could also help boost market confidence.

Mixed picture so far

Other data released for April have pointed to a mixed picture for growth.
Exports grew year-on-year in April, up by 1.5% and in line with expectations, while imports grew far more than expected, up by 8.4%.
In another indication of stabilizing domestic demand, consumer prices ticked up last month.
But a measure of prices at the factory level continued to decline. New loan data for April slumped to levels not seen in at least two decades, due largely to changes in data measurement but also reflecting sluggish demand from businesses and households in borrowing for the future.
A prolonged slump in the real estate sector has yet to show signs of significant turnaround, with many pre-sold apartments still under construction. More cities have eased housing purchase restrictions in the last few weeks in a bid to bolster sales.

Housing policy details expected

Officials from the housing ministry, central bank and financial regulator are scheduled Friday afternoon to hold a press conference about policies to support the delivery of homes.
Dan Wang, chief economist at Hang Seng Bank (China), said in an interview late last month she expected China’s property market to stabilize by the end of next year.
“It actually looks to me the policy succeeded, in a very brutal way because it’s happening too fast, because it’s essentially stopped speculation,” she said.
While the real estate slump has weighed in particular on middle-class wealth, she pointed out the economy overall has held up.
“Data quality aside, it seems like the economy is able to compensate for a big loss in the housing market by industrial investment and manufacturing,” Wang said. “It has showed some strength in the way the Chinese economy is organized and how its industrial policy has been done.”
China’s official GDP grew by 5.3% in the first quarter versus a year ago, better than expectations for a 4.6% increase. The country has set a target of around 5% GDP growth for 2024.
The EU Chamber of Commerce in China told reporters last week that recent economic pressures appear cyclical, and that it’s more important for foreign businesses to see an increase in domestic demand rather than industrial investment.
Retail sales grew by 6.8% year-on-year during a recent holiday period from April 29 to May 3, according to China’s Ministry of Commerce.
The ministry said retail sales of home appliances rose by 7.9% during that time, while that of automobiles climbed by 4.8%, boosted by nationwide trade-in incentives. More

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Higher-income consumers may be creating a frothy situation at Walmart.
Even though affluent shoppers helped drive the retailer’s latest beat on quarterly results, former Walmart U.S. CEO Bill Simon warns they’ll be hard to keep.

“The Walmart experience is better than it used to be, but it’s still not a premium experience. Walmart is built on convenience, cost and assortment. Not on service,” he told CNBC’s “Fast Money” on Thursday. “As the economic challenges abate … service will become more important than convenience and price. And, we’ll see a shift back of some of the consumers. That’s the bubble.”
His warning comes with Walmart stock hitting all-time highs going back to August 1972, when it began trading on the New York Stock Exchange. Shares surged almost 7% on Thursday after the discount retailer’s fiscal first-quarter adjusted earnings and revenue beat estimates. Walmart reported high-income consumers helped drive profits particularly in its grocery business.
“The challenge is that the tail winds that have come from food inflation that have pushed Walmart along will reverse eventually,” said Simon, who sits on the boards of Darden Restaurants and Hanesbrands.
Last October on “Fast Money,” Simon warned bargains were losing their magic because consumers were starting to buckle for the first time in a decade. His call at the time applied to lower-income consumers.
Now, Simon contends higher-income consumers going to Walmart isn’t good news for the broader economy,

“When money is tight, people react — even high-end consumers react,” he said.
Despite his bubble warning, Simon thinks Walmart is a “great investment” over the next 12 months.
“As long as there’s inflation and those tail winds that come from particularly from food inflation, more traffic will come to the Walmart store,” said Simon.
But he thinks the stock may hit a rough spot in 24 months as inflation comes down and higher-end consumers move away from shopping at discount retailers.
“When inflation abates and service becomes more important than price, some of those tail winds will become headwinds,” Simon said.

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