When Jamie Dimon speaks, Wall Street listens – and he just warned of catastrophe

1. Everyone pays attention when Jamie Dimon speaks. And yesterday he said there’s potential for widespread panic if lawmakers don’t get their act together and strike a debt deal. That panic “affects contracts, collateral, clearing houses, clients,” according to the JPMorgan CEO, who’s now the only major bank chief that was around in 2008 and is still in the game today. In an interview with Bloomberg, Dimon said he’s put together a “war room” at JPMorgan to plan for contingencies around a potential US default. He said his team currently meets once a week, but they could soon meet up to three times a day if folks in Washington continue to drag their feet on negotiations. While Dimon doesn’t anticipate the country will actually see its first-ever default, he acknowledged the clock is running down. “The closer you get to it, you will have panic,” he said. “Markets will get volatile, maybe the stock market will go down, the Treasury markets will have their own problems.” Dimon, whose bank earlier this month bought the assets of failed First Republic, said things should never happen this way, and any tumult in America impacts markets around the world. As far as the banking crisis goes, Dimon said it’s time for regulators to put an end to the chaos — but he’s still predicting policymakers will carry the wrong lessons moving forward. “I think it’s going to get worse for banks,” he said. “More regulations, more rules and more requirements. If you overdo certain rules, requirements, regulations — there are some of these community banks that tell me they have more compliance people than loan officers.” Not only should blame be placed at the feet of bank executives, but regulators should be looking in the mirror too, in Dimon’s view. Here’s how he put it: “I think there needs to be humility on the part of regulators. They should look at it and say, ‘OK, we were a little bit a part of the problem’ as opposed to just pointing fingers.” 2. US stock futures rise early Friday, as investors await the release of preliminary consumer sentiment data, due out later this morning. Meanwhile, Tesla shares ticked higher after Elon Musk announced he had found a new Twitter CEO. For the latest market moves, click here. 3. Earnings on deck: Allianz, Olympus Corp., and more, all reporting. 4. A hedge fund manager shared how he leverages GPT-4 to inform his top stock picks. He said it’s not about one or two prompts, but rather how you navigate through each prompt with follow-up questions. Here are six takeaways from his AI experiments. 5. A Zillow economist said home sales could crash 23% in the event of a US default. The so-called “X-date” is inching closer for the debt ceiling, and the housing market will feel the burn if no resolution is reached. The unprecedented event would deliver a “major negative shock” and a “deep freeze” for housing. 6. Fundstrat’s Tom Lee said the bull case for stocks is alive and well. Parts of the economy are seeing “outright deflation,” he explained — and that could lead to a sharp fall in prices that will boost stocks. 7. South Africa’s currency is hovering near a record low. The US just accused the country of secretly selling weapons to Russia, with a US ambassador saying “we do not consider this issue to be resolved.” Get the full details. 8. What credit crunch? Credit Suisse’s chief US economist told us why fears of a severe pullback in lending are overblown. Plus, he broke down his view on why the US economy is well-positioned to avoid a recession. 9. Personal finance expert “The Budgetnista” shared the two money mistakes that are holding people back from building wealth. She explained how you can determine whether you’re on the right track. 10. Microsoft is the stock to buy as it leads the charge in the AI arms race. That’s according to Wedbush, which said the tech giant’s early move into OpenAI and ChatGPT gave it an advantage over Alphabet.