JP Morgan 2Q17 Earnings Call Notes

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Marianne Lake

Expect normalization in September and rate hike in December

“So on the balance sheet, it is still the case that we expect to start seeing normalization in the balance sheet, in September, if not in September by the end of this year with the actually calling for the next rate hike in December the market is calling for March of next year. And as we said the communication has been pretty consistent and pretty clear across the Fed space, which is to say that is mostly price into the market at this as far as we can tell.”

Fed shrinking balance sheet is likely to slow deposit growth

“we would see the balance sheet shrink about $1.5 trillion over about the next four years. So that would ultimately slow growth not stock price and if we saw a $1.5 trillion come out of the Fed’s balance sheet empirical evidence would suggest that we don’t see dollar for dollar reduction in deposits. So if you just pick a point between 500 and a $1 trillion of deposit outflows at our 10% market share that would be about $75 billion over full-year. So it would slow growth. It would not stop growth and it is what we’ve been expecting and what we’ve been talking about now for an extended period and gradual is good enough. In respect of which deposits we would like to see, so that’s the sort of growth scenario.”

Jamie Dimon

Jamie Dimon’s diatribe

“we would see the balance sheet shrink about $1.5 trillion over about the next four years. So that would ultimately slow growth not stock price and if we saw a $1.5 trillion come out of the Fed’s balance sheet empirical evidence would suggest that we don’t see dollar for dollar reduction in deposits. So if you just pick a point between 500 and a $1 trillion of deposit outflows at our 10% market share that would be about $75 billion over full-year. So it would slow growth. It would not stop growth and it is what we’ve been expecting and what we’ve been talking about now for an extended period and gradual is good enough. In respect of which deposits we would like to see, so that’s the sort of growth scenario.”