JPMorgan puts $50 Billion on riskier companies to get in on the action.
Jamie Dimon Wants In
At every market top there is a signal. But signals are not discernable until after the fact. Is this bit of arrogance a signal?
The Wall Street Journal reports Jamie Dimon Says Private Credit Is Dangerous—and He Wants JPMorgan to Get In on It
Jamie Dimon says Wall Street’s hottest trend is a recipe for a financial crisis, but he’s investing billions to get in on it anyway. His plan: swoop in strategically and profit if there’s a meltdown.
In the ballroom of the swanky Loews Hotel in Miami Beach, Dimon got on stage in front of hundreds of clients in February to talk about the boom in unregulated lending to highly indebted companies. This fast-growing market has been sidelining big banks for years, and JPMorgan Chase’s (JPM) chief executive said it reminded him of the craze in subprime mortgages that sparked the 2008 financial crisis.
“Parts of direct lending are good,” Dimon said at the event in February, according to people who attended. “But not everyone does a great job, and that’s what causes problems with financial products.” He said that in the 2008 financial crisis, Bear Stearns and Lehman Brothers got in late, made bad choices and “bought these two shitty little mortgage companies,” leading eventually to “everything” blowing up.
The comparison was jarring. Just hours earlier, JPMorgan had announced it was investing $50 billion in private credit, more than a decade after financial firms such as Blackstone and Ares Management, which aren’t banks, kicked off the boom in lending to financially risky companies. Banks have typically shied away from this business because of stiff regulations meant to protect depositors.
The rise of private credit has disrupted banks’ fee-rich business of lending to corporate America, and JPMorgan and some of its peers have lost out as their new, unregulated competitors have expanded.
Dimon is racing to claim a stake before JPMorgan, the nation’s biggest and most profitable bank, is left behind, people familiar with his thinking said. Even if there is a crisis, Dimon has said he can position JPMorgan to profit.
JPMorgan was actually an early participant in the market but let its private-credit unit go just as the boom was igniting.
JPMorgan had promised to overhaul how it managed risk after its “London Whale” debacle in 2012, when traders took aggressive bets that bank executives were effectively in the dark about and lost more than $6 billion, leading the bank to admit wrongdoing and agree to pay more than $920 million in fines. The following year regulators imposed stricter limits on how much risk banks were allowed to take in corporate lending.
“As a bank, you can only watch private credit come from nowhere and get to a trillion dollar industry for so long,” said Glenn Schorr, a senior analyst at Evercore covering Wall Street. “This is what its clients are asking for.”
FOMO Hits JP Morgan
Jamie Dimon is singing those Fear of Missing Out blues.
It is very reminiscent of Citibank’s 2007 blowup.
Quotes of the Day / Top Call
On July 10, 2007 I posted Quotes of the Day / Top Call
No End Soon to Buyout Boom: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing”.
If ever there was market arrogance, the statements by Chuck Prince says it all.
It’s tough calling a top but I am going to try. I suggest the current trend is exhausted.
Music Stops for Chuck Prince
On November 2, 2007 I noted the Music Stops for Chuck Prince
The party is over and the music has stopped for Chuck Prince. His last dance is a two-step out the door. Citi’s Prince Plans to Resign
Dear Citigroup Customer ….
On March 27, 2008 I commented Dear Citigroup Customer ….
The post describes fraudulent letters sent out by Citigroup telling Adjustable Rate Mortgage (ARM) customers their mortgage rate were about to reset and offered them a higher fixed rate.
Citigroup knew full well mortgage rates were headed lower. I provided image clips of the letters.
Is This the Top?
You tell me. I thought the signal was clear in 2007.
Now?
I did not think the market would roar back to new highs after the tariff whipsaw, but it did.
S&P 500 Daily Chart
There are three open gaps below that I expect to be filled. But timing is unknown.
A gap occurs when stocks open above the high of the previous day (or below the low of the previous day) and stay there for the secession.
The December-March double-top eventually plunged over 20 percent intraday. Then Trump backed down on tariffs.
From that low, the S&P 500 made a new all-time high. But nothing fundamentally has changed.
If anything, fundamentals are worse. We have new 50 percent tariffs on copper, steel, and aluminum. Trump just announce a 30 percent tariff on Mexico and the EU, and 50 percent on Brazil.
As long as the market ignores these actions, Trump will do more.
Related Posts
May 31, 2025: Trump Will Double Steel and Aluminum Tariffs to 50 Percent
Tariff madness continues.
July 8, 2025: Copper Spikes to Record High After Trump’s 50 Percent Tariff Announcement
How Many Jobs Will Trump Create?
Assuming the US produces all the copper it needs, the answer is hugely negative.
Perhaps mining industry employment doubles, if and when US mines get into production.
But that is dwarfed by users of copper, all paying a higher price.
Tens-of-millions of consumers and businesses lose. A few thousand mining executives and employees gain (assuming the overall slowdown does not make everyone a loser).
This is “The art of the government-mandated deal”
July 9, 2025: Trump Slaps Brazil With a 50 Percent Tariff Over Treatment of Political Ally
The tariff Bizarro World gets more bizarre.
July 10, 2025: Letters Show Trump Sticks With Ridiculous Definition of Reciprocal Tariffs
Let’s review Trump’s definition of reciprocal tariffs and his new announcements.
Please let the phrase “The art of the government-mandated deal” sink in.
Gaposis, the most important gap on the chart is the open weekly gap, somewhere around 5700 spx 565 spy. Wave 3 of a larger wave 5 up of Elliott wave cycle, the dot com was 5 waves up, 2008 was ABC. Previous wave 4 was covid low, wave 5 retraces the wave. If 2009 was the wave 4, you’re doomed…
“Banks have typically shied away from this business because of stiff regulations meant to protect depositors.”
I remember that JP Morgan laid claim to the cash accounts of MF Global clients, after Corzine made bad bets.
The same Jaime Dimon that as CEO was responsible for paying the government $290M to Epstein’ accusers. According to Reuters, in November ’23, a “US judge approved JP Morgan’s $290M settlement with women who said Jefrey Epstein abused them and that the larges UU bank turned a blind eye to the late financier’s sex trafficking”.
Another $70M to the Virgin Islands for settlement for Epstein sex trafficking abuses that the bank was tied to.
The same Dimon that earned his stripes and CEO due to his ties with Leslie Wexner and who also sponsored Jeffrey Epstein.
https://freerepublic.com/focus/f-news/4149235/posts
The same Dimon as CEO whose bank was found guilty found manipulating the price of gold and fined $920M.
The same Dimon responsible for the Whale Trading scandal that was fined by UK and US authorities to the tune of $920M (not a typo) after losing $6B in trades.
Below link is a list of all JP Morgan fines. Ignore the ones prior to January 2, 2005 his first working day for JP Morgan.
https://violationtracker.goodjobsfirst.org/parent/jpmorgan-chase
Forget not listening to him. The man should be behind bars for running the biggest crime organization in the world.
He makes Jeffrey Skilling, Bernie Madoff, Sam Bankman – Fried, Bernard Ebbers, Charles Keating and Donald Trump look like pikers in the fraudster game yet never arrested.
He is prima facie evidence that Dimon and the JP Morgan are corrupt.
Yet, podcasters, bloggers, media pay homage to this guy that in a just society would be in prison for life.
You can see the plebian stock market is being left behind. I picture it as kind of like the billionaires going into gated orbital yachting resort level, and leaving the plebes with a giant rug-pull, a giant revaluation, re-pricing downward of the low-capital human masses. It is like the reissues of currencies we saw in various tragicomic episodes of the past, or the chits the new Russia issued to its masses in place of their former equity in the USSR. It is a ticket to the curb, a velvet rope that says if you have to ask, you can’t enter into the growth of the new AI-tech etc. economy. First it was dual voting shares (META), now it is skipping IPO’s entirely. What is born between private cronies stays there, in their perpetual trusts for their odious nepo offspring forever. Except there will be little crumbs, buy-ins at absurd markups for the suckers, probably in bankruptcy-remote structures (NFTs or some other fake tickets) pretending to be a piece of SpaceX or whatever.
i did business in russia in 90s with oligarchs and their investment bankers. it really was wild to see an evil empire stripped like an auto left on side of highway in nyc in the 70s and 80s……..
I’m very concerned about our whole financial system sliding off the regulatory map. The casino consciousness is evident. This is enhanced by the Trump family’s clueless thumbs on various scales: the watchman is off the ranch too.
Loud and clear.
Here are the warnings.
JPN 10-YR 1.579 +0.08
JPN 15-YR 2.527 +0.011
JPN 20-YR 2.61 +0.11
JPN 30-YR 3.163 +0.117
5 years ago JPN 10 – YR was 0%
And JPN 30 – YR was 0.6%
Blinds will be destroyed soon.
The unwind of the Yen carry trade is going to be bloody…
Yes, but when?
Mish, great post and observation. In spite of relatively high interest rates, valuations in the US equity and real estate sectors are at all time highs. (Buffet indicator about 208 % and April 2025 Case-Shiller Index 329. ) Fractal Global Equity target peak valuation: 16 July 2025 with incipient crash over 4-5 weeks. Asset valuations are simply too darn high relative to personal income, personal debt, interest on that debt, and the blamable usual suspect: war-on-ally tariffs and increased personal cost of, e.g., Brazilian coffee. Unconstitutional T Tariffs, via post hoc, ergo propter hoc logic, will receive the lion share of culpability.
Wall Street and big banks don’t have real investment risk. They can invest and fund high risk assets like private equity and private credit because government will bail them out when things fall apart.
Not only that, but the firms that showed great discipline in the 2003-7 run-up and were very solvent, like BB&T, were not allowed to profit from it, and were forced to take the Federal bail-out money so no one would know who the sickest companies were. The US is no more a free country with a free market than it is a “democracy.”
banking is too restrictive now and private funds have access to capital and allocate it however they want. They don’t want to lose money so it’s about management You have companies like Blue Owl who can invest,take the risk and are not under the thumb of Treasury Dept and Fed.
“They don’t want to lose money ….” Almost verbatim what the “genius” Greenspan assured everyone prior to 2008. And we wound up with the dinner check, yet again (thinking also of S&Ls 1980’s).
Never bet against the bailouts for The Too Big To Fail / Too Big To Jail.
But it never cracked the dollar. This time, I have a premonition it well could.
Why Trump’s push for a 1% Fed policy rate could spell trouble for US economy
https://www.reuters.com/business/finance/why-trumps-push-1-fed-policy-rate-could-spell-trouble-us-economy-2025-07-14/
Good article, but the biggest beef I have is congress will not deviate from massive over-spending of income until voters get the message that congress is fleecing them with debt and debt service which is a prime contributor to the dollar’s diminishing purchasing power. The only way the low information voter, as Rush Limbaugh used to characterize many US citizens, will get the message is to be shocked into the realization. Lower interest rates will exacerbate the over-spending by congress making things worse not better. As for stimulating growth, that’s a flat-out fabrication. For roughly $1.8 trillion in federal deficit spending last year, we have received about $1.4 trillion in GDP growth for negative efficacy. That stimulus does not include all the infused money via fractional reserve banking. Raising taxes will not increase revenue above 20% of GDP, not matter the amount rates are raised. Nearly a century of history has proven that per fed data. The only way we fix the problem is to spend less than we take in, pay down the debt, and turn from political gimmicks and creative accounting. This is a tough love approach I realize, but it is the only approach, and we have got to have an honest discussion/debate, or we fail as a nation from within, not from foreign influence or invasion.
The fed is exacerbating the problem with their self-defining of stable as 2% inflation. Any inflation is not stable and where did the fed get the authority to define anything from its real meaning? In an economy where productivity is increasing, prices should fall as services and products are less expensive to supply. It is a fleecing of the American citizen by an organization that should not exist.
100% agree, thanks for the good explanation.
Good article.
Mish, how much do affect on things do you think the falling US dollar has had? YTD it’s down 11% now which is significant.
If you look at the S&P price of 6300 and take off 11% you are down to 5700 which is roughly in line to where the S&P was on Jan 1.
Similarly, if you look at commodities, say gold, it’s price is 3300. If you take off 11% it’s about 2900 which is higher than the 2600 on Jan 1st but is up ‘way less’ than what looking at the raw numbers show (3300 vs 2600). It’s probably similar for copper/silver etc.
Also given China pegs it’s currency to the US dollar they must be selling Yuan like crazy to drive down the price to match the peg. What’s the effect of that on the markets (not just the US but worldwide and even within their own country)?
Why are you ‘devaluing’ the S&P 500 by the changing international value of the US dollar?
An American investing in the S&P 500 has an asset – claim to future profits of those 500 companies. IF I cash in all my S&P 500 investment dollars today, and IF I use ALL those dollars to purchase foreign goods today, and IF I had invested those dollars on January 1st instead of buying the exact same foreign goods back then, yes the cost of those foreign goods are now 11% higher (minus the capital gains in the S&P500 since January 1).
But who does that apply to?
Well it applies to those companies in the S&P who do international business. Sales and profits earned in the EU for example now look 10% higher when shown in the quarterly numbers.
Also roughly 18% of investment in the S&P is by foreigners so for them despite the fact the S&P looks up to us, it looks sideways to them. So that could increase selling pressure as foreign investors look to leave the S&P for different markets to avoid the drag of the falling dollar on their portfolio.
As an example of the effect of a falling dollar, look at gold prices from say 2015-2021 time frame. It more or less went sideways in the US due to a strong dollar. But in most foreign currencies (UK/EU etc) gold appreciated a lot because those currencies were falling. So for them gold made sense as an investment while it did not here because it wasn’t appreciating.
Thanks Texas
Buy high and sell low, that’s been my strategy.
At every market tops central banks are buying gold and landlords are raising rent.
For 7TD SPX is crawling on 1M 1929 to 2000 resistance line. Can it rise to 6,400: yes. Can it flop and drop : yes. 1M Dow: for eight months the Dow failed to close above Dec 2024 high. The 1M E mini Dow reached its target in Jan 2025. July has a large selling tail. Can it rise and close above Dec high in July or Aug: yes. Can July be red for a short break to fill the tank: yes. Can it plunge: The market will do whatever it wants it to do. We don’t know what will happen next.