Miscellaneous Quotes for Week to 14th July 2017

JPMorgan Chase & Co. Chairman Jamie Dimon in Paris

We face risks in the unwinding

“‘We’ve never had QE like this before, we’ve never had unwinding like this before. Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before….When that happens of size or substance, it could be a little more disruptive than people think. We act like we know exactly how it’s going to happen and we don’t.”

Prepare for a hard Brexit

“We have to be prepared for a hard Brexit. So whether you think it´s going to happen or you think it is not going to happen, that is the planning.”


Air France-KLM CEO Jean-Marc Janaillac

Summer booking positive in France

“The second quarter is good and the bookings for this summer are also quite positive compared to last year…We suffered from terrorist attacks, especially in 2016, but we have recovered this year. Visitors from the States and China and Japan are coming back. This year we came back to the situation of two years ago and a bit more. We are quite hopeful that during the next year we are going to keep on increasing our visitors from overseas.”


Bank of Canada Monetary Policy Statement

Stimulus withdrawal begins

“Recent data have bolstered the Bank’s confidence in its outlook for above-potential growth and the absorption of excess capacity in the economy. The Bank acknowledges recent softness in inflation but judges this to be temporary. Recognizing the lag between monetary policy actions and future inflation, Governing Council considers it appropriate to raise its overnight rate target at this time….Governing Council judges that the current outlook warrants today’s withdrawal of some of the monetary policy stimulus in the economy.”
SEC Chairman Jay Clayton at the Economic Club of New York

On the DOL Fiduciary rule

“With the Department of Labor’s Fiduciary Rule now partially in effect, it is important that the Commission make all reasonable efforts to bring clarity and consistency to this area.  It is my hope that we can act in concert with our colleagues at the Department of Labor in a way that best serves the long-term interests of Mr. and Ms. 401(k). There is a lot of work to do, and this issue is complex…any action will need to be carefully constructed, so it provides appropriate and meaningful protections but does not result in Main Street investors being deprived of affordable investment advice or products.”


Note by Ray Dalio Chairman & CIO at Bridgewater Associates

It´s the end of an era so dance closer to the exit

“we are at a) the end of that nine-year era of continuous pressings down on interest rates and pushing out of money that created the liquidity-fueled moves in the economies and markets, and b) the beginning of the late-cycle phase of the business/short-term debt cycle, in which central bankers try to tighten at paces that are exactly right in order to keep growth and inflation neither too hot nor too cold, until they don’t get it right and we have our next downturn. Recognizing that, our responsibility now is to keep dancing but closer to the exit and with a sharp eye on the tea leaves.”

And the beginning of a new one

“Generally speaking (depending on the country), it is appropriate for central banks to lessen the aggressiveness of their unconventional policies because these policies have successfully brought about beautiful deleveragings….looking ahead, we don’t project a big debt bubble bursting any time soon (because of the balance sheet repairs that have taken place), though we do see an increasingly intensifying “Big Squeeze””

CNBC Interview with UBS CEO Sergio Ermotti


There are still weak players in Europe

“It is clear that Europe is not one pot in which all banks are behaving the same way. There are winners and there are very strong players in Europe and there are still weak players that should be allowed to restructure or to be consolidated.”

They desire normalization of rates

“The sector…would welcome a little bit of normalization on the rates side in Europe. It is clear to me that we’ll see what’s going on in the U.S.. If the U.S. hikes more than once or two times it is going to be very difficult for the ECB to stay on hold for too long. I think that you don’t want to create too much of an interest rate gap between the between the euro and the dollar.”

Negative rates have not been passed to retail investors

“to pass the cost of negative rates to the borrowers it’s, you know, it’s a counter-intuitive measure in any case and it’s going to be very hard. I think that at this stage we are limiting and we basically are not passing the cost of negative rates to so-called retail investors. But we have been passing more and more the cost of negative rates to wealthy individuals or family offices and corporate clients.”

Need for change in policies to boost business

“I do see a little bit of a stagnation of business, and a little bit of volatility and change in policies may help to give a little bit of momentum to the business.”

People are investing cautiously 

“if I look at the cash balances as a percentage of wealth we manage, they have been coming down from the high-20s to around the mid-20s. So this is clearly a sign that people are willing to invest more, but still very cautious. You know 26/27 percent cash balances is still almost twice as high as we had five years ago.”


Fed Governor Lael Brainard at the NBER ’s Monetary Economics Summer Institute

Normalization underway

“In the United States, in my assessment, normalization of the federal funds rate is now well under way, and the Federal Reserve is advancing plans to allow the balance sheet to run off at a gradual and predictable pace. And for the first time in many years, the global economy is experiencing synchronous growth, and authorities in the euro area and the United Kingdom are beginning to discuss the time when the need for monetary accommodation will diminish.”


The FOMC delayed balance sheet normalization for a reason

“the Federal Open Market Committee (FOMC) decided to delay balance sheet normalization until the federal funds rate had reached a high enough level to enable it to be cut materially if economic conditions deteriorate, thus guarding against the risk of returning to the effective lower bound (ELB) in an environment with a historically low neutral interest rate. The greater familiarity and past experience with the federal funds rate also weighed in favor of this instrument initially. Separately, for those central banks that, unlike the Federal Reserve, moved to negative interest rates, there may be special considerations associated with raising policy rates back into positive territory.”

He expects balance sheet normalization to start soon 

“If the data continue to confirm a strong labor market and firming economic activity, I believe it would be appropriate relatively soon to commence the gradual and predictable process of allowing the balance sheet to run off.”

He thinks the neutral real fed funds rates will remain close to zero

“In my view, the neutral level of the federal funds rate is likely to remain close to zero in real terms over the medium term. If that is the case, we would not have much more additional work to do on moving to a neutral stance… in recent days, we have begun to hear acknowledgement from other major central banks that they too are seeing conditions that suggest policy normalization could be on the table before too long, against the backdrop of a brighter global outlook…the pace and timing of how central banks around the world proceed with normalization, and the importance of balance sheet policy relative to changes in short term rates in these normalization plans, could have important implications for exchange rates and financial conditions globally.”



PepsiCo’s (PEP) Q2 2017

CEO Indra Nooyi

Business in Latin America performing well in spite of the challenges

“in Latin America we continue to see very challenging macroeconomic conditions, geopolitical instability, and high levels of inflation in key markets, including Brazil and Argentina, which are dampening consumer spending. Within this context, our businesses are performing well.”

Strategies to counter increased global challenges

“We are pricing to cover the increased cost of doing business, we are going more aggressively after productivity to reduce our overall costs, and we continue to transform our beverage portfolio to offer more non-carbonated options and reducing sugar levels across the portfolio.”

They are paying attention to e-commerce

“The good news is, our e-commerce business is growing brilliantly. We are doing very, very well. We are not yet ready to talk about it in any significant way….it’s growing with our traditional products and our traditional packaging, if you want to call it that….we are looking at meaningful innovation, both in snacks and beverages, in order to address the exploding growth of e-commerce”

Retail is changing and we must change with it

“Perhaps more pronounced are the changes we are witnessing in retail where the lines are blurring between channels…the channels are beginning to blur between food service, retail, home delivery, restaurants, everything, the channels are beginning to blur….you now have a shopping occasion being replaced by home delivery or replaced by a meal delivery of kits. So what we have to do is rethink what is the real growth of the marketplace, the food and beverage marketplace, in a much more holistic way…we all as manufacturers have to start to rethink how we serve this multiplicity of channels and how we should retool our business models to serve every one of these fragmenting channels.”


European Central Bank Forum Speeches

Mario Draghi, President of the ECB

Muted inflation expectations

“We see growth above trend and well distributed across the euro area, but inflation dynamics remain more muted than one would expect on the basis of output gap estimates and historical patterns.”

Challenges to reflation

“monetary policy is working to build up reflationary pressures, but this process is being slowed by a combination of external price shocks, more slack in the labour market and a changing relationship between slack and inflation. The past period of low inflation is also perpetuating these dynamics”

Monetary accomodation still needed

“While there are still factors that are weighing on the path of inflation, at present they are mainly temporary factors that typically the central bank can look through. However, a considerable degree of monetary accommodation is still needed for inflation dynamics to become durable and self-sustaining.”


Mark Carney, Governor of the Bank of England

Firming global growth

“The Bank of England estimates that more than 80% of the world economy is now growing above potential. Global measures of industrial production and capital goods orders, as well as world trade, have strengthened markedly over the past year…With that more favourable outlook, investment intentions are now rising around the world”

Easing on the horizon

“Some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional.”





Stephen Poloz, Bank of Canada Governor on CNBC

On the initiatives by the US government

“Well we’ve given up modelling specific initiatives because it’s taking some time to come into focus and we think whenever something concrete is tabled we’ll have then time to do the modelling and understand it. I think at the company level people have just been weighing this extra layer of uncertainty about the future…those uncertainties are holding back investment decisions even though investment is picking up. It’s picking up less than it would without that uncertainty. So it’s a bit of a headwind.”

Speech by Fed Vice Chairman Stanley Fischer

Appreciating asset prices increase the appetite for risk and leverage

“…elevated valuation pressures, especially when combined with high leverage, can lead to excessive credit growth. When asset prices are appreciating rapidly and expected to continue to do so, borrowers and lenders are more willing to accept higher degrees of risk and leverage”

Banks have high regulatory capital

“Regulatory capital at large banks is now at multidecade highs. The largest banks have already met their fully phased-in capital requirements, including the conservation buffer and the capital surcharge for the global systemically important banks….Measures of earnings strength, such as the return on assets, continue to approach pre-crisis levels at most banks, although with interest rates being so low, the return on assets might be expected to have declined relative to their pre-crisis levels–and that fact is also a cause for concern.”

On debt levels

“In the private nonfinancial sector, which includes corporations and households, total debt remains well below its long-run trend, largely driven by subdued borrowing among households. However, the corporate business sector appears to be notably leveraged, with the current aggregate corporate-sector leverage standing near 20-year highs.”

Auto and Student loans are a spot of bother

“Auto loan balances and delinquency rates are high for borrowers with lower credit scores, meaning that the riskiest borrowers are borrowing more and not paying it back as often….Student loan balances keep rising, and delinquency rates on those loans are near historical highs”

We dare not be complacent on risk

“There is no doubt the soundness and resilience of our financial system has improved since the 2007-09 crisis. We have a better capitalized and more liquid banking system, less run-prone money markets, and more robust resolution mechanisms for large financial institutions. However, it would be foolish to think we have eliminated all risks.”



Apple CEO Tim Cook on Bloomberg BusinessWeek

Apple CEO Tim Cook on Bloomberg BusinessWeek

AR is the future

“The first step in making (Augmented Reality) a mainstream kind of experience is to put it in the operating system. We’re building it into iOS 11, opening it to ­developers—and unleashing the creativity of millions of people. Even we can’t predict what’s going to come out….You’ll see things happening in enterprises where AR is ­fundamental to what they’re doing. You’re going to see some consumer things that are unbelievably cool. Can we do everything we want to do now? No. The technology’s not complete yet. But that’s the beauty to a certain degree. This has a runway. And it’s an incredible runway. It’s time to put the seat belt on and go. When people begin to see what’s possible, it’s going to get them very excited—like we are, like we’ve been.”

On repartiatring dollars

“I’d come up with a reasonable percentage. I’d make it required, not something where people say, “Well, I’ll just bring back X.” You get charged, and you can decide whether you want to bring it back or not. But you’re getting charged. That’s what I would do on the past stuff. On the future stuff, I’d come up with a really simple system. I would go for zero deductions. I wouldn’t allow any.”

The tax on international earnings is too high

“The issue is not that there’s a tax on international earnings. The issue is the existing tax has been crazy. No one would bring it back at a 40 percent—I mean, 35 percent federal and then state taxes. That’s the problem.”

Miscellaneous Quotes for Week to 16th June 2017

Jeffrey Gundlach, CEO and CIO of DoubleLine from CNBC

The days of low volatility are numbered

“We’re on increasing watch for volatility….there is a massive amount of money that is being short VIX. It’s a trade that’s made a lot of money and its very very crowded, which suggests to me the days of low volatility are numbered.”

Stock up on cash

“If you’re a trader or a speculator I think you should be raising cash today, literally today. If you’re an investor you can easily sit through a seasonally weak period,”


Bank of England’s Monetary Policy Committee (MPC) on 15th June

Slow growth in Q1, Q2 expected to be better

“GDP growth declined markedly in the first quarter, in part reflecting weaker household spending.  It remains to be seen how large and persistent this slowdown in consumption will prove….Surveys of general business activity suggest a modest recovery in GDP growth in the second quarter.”



JPMorgan Chase’s (JPM) at Morgan Stanley Financials Conference

Gordon Smith – Chief Executive Officer of Consumer & Community Banking

Growth in credit across the ranges

“…everything that we read in the numbers we feel comfortable that we will get paid for taking that extra risk. We are going to sub-prime lending, but we are seeing growth actually across all segments and I think it is actually quite encouraging when we look at the economy…I think the economy actually looks very good and we’re seeing that growth as I say across all the credit range. ”

Reserves are being rebuilt in credit cards

“…we are now in a cycle where reserves are being rebuilt, they are not being released in credit card, I guess across most players – across most players in the industry, but going back, we have guided that we’ve typically have underwritten the newer vintages towards plus or minus 4.5. It will take us a while to get there, but we will see, we and the industry will see a rise in losses and the reserve builds to go with rise in losses and with rising loan growth…people still seem to be surprised that we are at the end of that cycle that we have never seen in the 50 years of lending money on credit cards, I was not there the whole 50 years, but we have never seen losses this low, and then I will begin to migrate back up to more the historical averages over time and it will take a while to get there.”

They are harnessing the power of big data

“we have an organization called Intelligent Solutions, which just brings the enormous power of all the data that we have to help target who are the right customers for the products that we have. That has significant financial returns because we are able to invest their marketing dollars in the right way. So the power of big data is really clear for us.”

FOMC statement on monetary Policy 14th June 2017


“…the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid..the unemployment rate has declined. Household spending has picked up in recent months, and business fixed investment has continued to expand.”

On inflation

“On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.”

Rates forecasted to remain low

“The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”

Balance sheet normalization to start this year

“The Committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated. This program…would gradually reduce the Federal Reserve’s securities holdings by decreasing reinvestment of principal payments from those securities”