As a bond trader for over 40 years, I’ve seen many brokerages and banks consolidate. One of the well-known stock brokerage houses in the 70’s and 80’s was E.F. Hutton, who later became part of a Citigroup/Morgan Stanley joint venture. In those days, they had a very catchy advertising slogan; “When EF Hutton talks, people listen.” Not only was that a successful, clever pitch, but people did listen, and they became one of the leading Wall Street firms of the time.
Today, that slogan could be true for another firm. When J.P. Morgan Chase CEO Jamie Dimon talks, Wall Street listens…. usually… but not recently.
Diamon has warned investors to be cautious after last month when markets tanked due to tariff scares. He points to market complacency and ignoring the downside risks in front of us. Diamon said, “Macro conditions have fundamentally changed. Supply chains remain fractured, energy markets are jumpy, and real wages are still being eroded in many developing countries.” (1) And yet, the stock market seems to have brushed off these issues having recovered most of its previous losses as if the issues he stated no longer exist.
It seems like no one is listening, even despite budget issues, a soaring national debt, and the “unknown” ramifications of the tariffs grappling corporations and small businesses across the globe. Even the bond market is talking, and the equity market is not listening. Municipal and Treasury bond yields reached 5% this week and that’s not a loud enough message to take it slow.
Dimon’s concerns are not isolated. This week, Citigroup CEO Jane Fraser echoed similar sentiments. She stated, ‘We are entering a new phase of globalization — one less defined by cooperation and more by strategic self-interest. Long-held assumptions are being challenged, not just by tariff announcements but by a deeper confidence shock. The near-term impact is already being felt, and the long-term trajectory is being rewritten in real-time.’ (2) Fraser’s message is clear-the signs of change are everywhere, from a weaker dollar to higher bond yields, and a shift towards investments in Europe, India, and other regions beyond our borders.
The messages we hear are mixed. The Administration wants us to brush off the chaos, which includes trade tensions, geopolitical uncertainties, and economic policy changes, and to be patient. Corporate CEOs, one after another, are warning the public to buckle up. Prices will rise, and supply may go down. There is no way investors should expect for-profit, public companies, which answer to stockholders, to absorb most costs of the unknown issues ahead.
Regardless of the conflicting public statements, one thing is certain amidst all this uncertainty-the ripple effects of higher prices for consumers and businesses will be felt by everyone. This underscores the need for caution and strategic decision-making in the face of the economic turbulence ahead.
So, for all this talk, … maybe we should all be listening.
