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IHS Chief Economist Nariman Behravesh on how the economy’s weak growth may have impacted J.P. Morgan’s losses.
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Well JPMorgan's two billion dollar -- is partially because the US economy is weaker than CEO Jamie Dimon expected.
Just a couple of months ago our -- Charlie -- -- -- sat down with the Jamie Dimon about his outlook for the United States and here's what he said.
It's a mild recovery but has broad based and it could be strengthening as we speak we took -- in your view Jamie Dimon economists.
4% GDP this year yet to be three or four real here.
Now three to 4% so what level of GDP growth should the US be targeting.
Joining me now is -- very bearish I HS chief economist -- great to see yeah well.
He may be ruling the day that he -- how -- Charlie and suggests that could be as high as 4% but very simply.
You can look at this in a simple -- it may not be as simple things usually aren't quite miserable but the man at the top says that the economy's gonna be growing strong.
So the traders.
Make trades accordingly.
And that's why this particular trader the wonder well got in the positioning got -- Is is it fair to say that that it started -- Jaime diamonds prediction about 4% economy.
Well I don't want -- place any blame in terms of what happened at JPMorgan.
But I was -- just based on what I heard him say he was a little too optimistic I think our view is that growth is -- tutor to a half presents.
This year and if we're lucky next year be around 3% so.
I think Jamie was getting just a little -- had a terrible -- let me put it a little differently then wouldn't that trade to that two billion dollar trade have been made.
If Jamie Dimon had predicted 2% instead of 4%.
Well again I can't get into the had a view that Jamie -- -- as traders but.
My gut reaction would be obviously it's a less favorable trade if you if you're assuming the -- The the growth rate in the economy revenue lowers our could be out is that now -- this -- -- index.
I mean what this traitor to just be specific what this trader was trading was an index of a 121 companies as CDS values of a 121 US companies.
And the suggestion is if if they have been going great guns that would have been a terrific trade but they weren't.
So it could be said that you know you you get -- you get your cues from on top that's what the CEO is therefore and then you do you you make corrections according to that so.
It started at the top now.
-- -- -- -- And office suite -- have this.
-- try to judge -- I've bought I don't know highways and back.
From from -- prospects should maravent you know you say you say 2% of his.
Is that strong enough to make a solid -- for the economy yours.
Is at at a 2% growth rate are we still a little too anemic for example to get in the financial sector.
Yeah I think I think that I -- -- -- -- would agree with that statements there it.
I mean no question about it it's.
You know we talked to to -- percent a lot of these bets.
Are we really are very FA so -- -- that prospective yeah I that this is.
Doesn't make a lot of sense to good to go I'll let them when you're only to look at -- to two and a half percent growth rates integrated.
Let us pull back and look at the system because you know as as as both Tom -- a lot of -- very bullish on the financials and bullish on JPMorgan.
But even he is worried about regulators stepping in balance and dollars too much concentration of power too much concentration of wealth in this one sector of JPMorgan is.
Are those regulators correct in thinking that this guy this London whale having.
Having 350.
Billion dollars to trade worth of assets is that too much for one group to have.
That's my gut instinct the answer that question is yes.
And of course you know we -- you were talking earlier about too big to fail.
I think we have created a monster here in terms of the whole system.
That we've now got -- you a lot of financial power concentrated in a few banks and -- -- financial institutions and and that worries me and and Dodd-Frank only made that worse as far as I'm concerned.
So this is a big risk.
And I think to the extent the regulators -- -- -- attention here.
It's to reduce that risk that's probably the single biggest risk right now in terms of the US financial system.
Merriman bearish great to see an -- and hope I didn't what you too much on the spot there thanks for being here appreciate fine let.
