Finance executives talk Triangle, NC's economic surge

What is it about Riley Schools people companies technology

Parks restaurants now you know

My two of my daughters went to Duke so I

was used to going there and the whole restaurant scene

just took off like years ago and so new jobs

reports out uh you know the new tariffs as well

um I mean are are you concerned about the future

with uh this news Well I didn't analyze the jobs

report

I know it was owing so many jobs and they

had to dig underneath like those numbers are highly distorted

every month they come out and probably overreacted to but

you guys also look at hours worked and how many

people left the job force and what happened and what

companies are doing so I I really don't know

I don't overreact to monthly numbers to tell you the

truth and you know the tariffs I think is they've

it's hard for some people you're gonna hear a lot

of stuff about it but it's kind of stabilized a

little bit and

People at least can deal knowing what they are and

try to figure out their future plans are

With the announcement about the tariffs uh last night getting

effectively pushed back another week um causes some uncertainty with

businesses in terms of how to invest and how to

hire

um what do you make of that decision and how

can we how can we put it into context in

a macroeconomic perspective and what does it mean for JP

Morgan Yeah I don't I'm not sure they pushed back

a week so

Japan was done

Europe was done

South Korea is done

Those are like the biggest of all

So the ones you're talking about push back or probably

rather minor overall and uh and I don't know the

effect of a week

I think people are getting their hands wrapped around planning

around it you know it does create uncertainty

It'll probably create a little inflation and all that and

probably slow down growth whether you know changes the direction

of the economy I do not know

And you know when if I if I called up

all of our clients and surveyed them you'd hear exactly

the same thing

Some of it doesn't matter some of it matters some

of it's gonna help some of it's some may not

be able to do very well with it

Some will pass on costs some won't pass on costs

and we're just gonna have to wait and see how

it plays out

I I can tell you when I meet with clients

what what's changed is when when the tariff thing first

started it was sort of there was a paralysis like

this is enormous what do I do now people are

used to there's a different tariff announcement every day and

and they they're sort of numb to the noise a

bit and they're just getting on with it

And they've resumed investment activity in spite of the uncertainty

and in spite of the fluctuating direction I guess

Not fully yet but we do see some green shoots

so we we look at as I said we survey

500 small businesses every month

We look and they talk about their willingness to invest

It's up about 10 points from where we were in

the lows in April

It's still not where we were in January before all

of that happened but it you know as as demand

holds up

You know you get backed up as a as a

business you see that demand and if you're not investing

against that demand you're ceding that market share or you're

ceding that opportunity

So the longer that goes on and now if demand

comes off that's a different story but as long as

demand holds up there will be pent up demand for

that investment

Another thing which you put there too is that the

tax bill creates a huge amount of certainty

You know your tax is gonna be you know you

can deduct uh create an incentives to make more investments

So you do hear see companies doing that too

So there's an offset to the tariff uncertainty

Speaking of uncertainty there's a lot of talk right now

about artificial intelligence

Where do you see that at JPMorgan Yeah so there's

always uncertainty

I I always tell people look at things

This always step back and say that's almost permanently true

And you know maybe there's a little bit more today

than normal

AI is real

We have 2000 people doing it

We've been doing it for the better part of 14

years

We have an AI research department we started like 7

years ago with 200 people in it doing things like

you read about national language processing synthetic data uh Gen

AI

We have it

You can use an LLM on internal data now which

we have literally 150 or 200,000 people using

Outside of that we have we use it for risk

fraud marketing

Uh you know probably 500 use cases

My guess is they'll double or triple the next several

years

Some will be top down some will be bottom up

It will affect every job

Uh it will cause some jobs to go away

That's a given

I don't put your head in the sand but we

retrain people we redeploy people and it's all gonna be

used to do a better job for clients

That's why we do things you know we use technology

to serve you something better faster might be much more

customized much more thoughtful much faster and we used to

hedge trading floors we used to inform clients of errors

um so it's it's real and it's gonna move pretty

quick

How do you use it I I don't use it

I I I I usually use to do research when

I wanna ask them a question

So if you like you can ask like you have

to be very specific like will tariffs which industries will

it affect the most it'll give you a long answer

or if you wanna ask it a medical question it'll

and you can also say to it you know answer

this question but only use professional medical journals

This thing in chat for called Deep research which you

know gives you much more information and then you could

drill down lower

It still can't answer the big questions of life

What causes inflation What happened in the 70s and you

know what's gonna happen now and they can't see the

future whereas you can

You know the things you can know are gonna happen

in the future that it can't it does not know

are gonna happen and so um like for example the

re-militarization of the world the restructuring of trade uh you

know the fiscal deficits you know it's not gonna predict

those things but you can pretty much yourself predict them

and then try to figure out the consequences of them

I can also add that it's going everywhere

So for the first time we survey again we ask

this question every month

For the first time more than half the small businesses

say they are using AI in their businesses and they're

using like co-pilot or they're using it to help streamline

their operations

We we hadn't seen that before

We'd said people said they wanted to try it

Now they say they're using it

Yeah and and I remember all the software people are

adding it

So if you use Salesforce CRM they add it so

you automatically you get it if you want to use

it

so

Um in April you talked about you know structural weaknesses

you know with inflation risks and trade policy shifts

How has your view on that changed since your meeting

with the president Well it has nothing to do with

the meeting

There are still structural risks ahead which I would put

geopolitics in there

I think there are a lot of things which might

be inflationary which have nothing to do with the present

They have to do with structural forces like remilitarization restructuring

fiscal deficits but we don't know and I and I'm

not trying to forecast next year

Some of these things are long thing long tail things

So if you look at economic history there are things

that happened in 1971

That started to have a real effect in 1974 1975

1976 and we start to look at year over year

it confuses you you know and I'm sometimes those things

are still there and hopefully they'll be negotiated away

The Ukraine you know well hopefully it'll be a peaceful

settlement in favor of Ukraine you know peace in the

Middle East

Well you know we'll see

These are tough things and the restructuring of military militaries

and trade and economics those are long tail things

Back to what your team is seeing uh within the

bank how is the student loan repayment start affected household

finances and um how do you see that playing into

some of the larger you know um themes in the

economy like housing Have you been through that I I

have yeah

So it it it is going to have an effect

Because there are lots of people who were not paying

so it will reduce their cash flow and our people

actually do a very detailed analysis of our clients consumer

credit and when net net net it will have an

effect but not that material on our clients uh you

know obviously if you look at home you know can

you afford a home it'll it'll reduce affordability for a

bunch of people

Um the other thing which you gotta look at student

lending it's like 1.5 or $6 trillion

And the really bad part was people who didn't finish

for profit schools

It wasn't everybody and you really have to question why

we'd be forgiving you know I graduate student loans you

know people who went to college got degrees you can

earn twice as much as people didn't go to college

uh so there are legitimate ways to handle this but

if people deserve forgiveness forgive the people actually deserve it

And literally if you look at the facts and there

was a great article in The Washington Post recently he

laid it out it was that's where the problems were

for profit

The government was pushing this back in when they took

over government student lending and the government hasn't confessed fully

either

You're gonna lose you the taxpayer $500 billion

They haven't told you that have they And you're gonna

pay it because they did bad underwriting which they should

never have done and I think it was the whole

thing became a disgrace so we should forgive those who

should be forgiven not everybody and then fix the program

that's the other thing they have to do change the

program and stop doing stupid stuff

What sort of appetite do you see for changing the

program and underwriting standards my guess is they will

I think I think they understand that this is has

been

He a terrible boondoggle has put people in very bad

position and then you have to question you know what

what what are degrees worth I mean there should be

a process says I'm going to get a degree because

it's gonna help me with livelihood and stuff like that

not just make it free and then universities should have

taken a little bit of responsibility too which you guys

should hold their feet to the fire

They took all this money they built all these uh

Pilates centers and yoga centers and flowers and lawns and

stuff like that and the cost of education went up

and up and up

They didn't take any responsibility to reduce the cost of

education or to be responsible for these kids graduating getting

good jobs in a lot of cases so

Lot to fix here

Do you see any I'm dying for you guys to

write the important stuff

Dig deep

We need the press to dig deep

These are the ones to do it

Don't don't just do clickbait headlines you know

Do you see risk in the student loan lending market

in the way that you know not not housing I

guess in 2008 but like could there still be underlying

risks that like to who Consumers I mean and and

maybe the broader banking community

It's one factor out of hundreds that are gonna affect

consumers and you know there's something like $12 trillion of

consumer debt something like $10 trillion is mortgages 1.5 is

student lending so you know it's small by relative to

a mortgage or something like that and I forgot the

credit card number but something like $2 trillion and so

yeah it it it it adds to the potential risk

that consumer spending will drop a little bit and we've

seen that a little bit already you know

But it's kind of normal consumer spending moves around a

little bit as long as people have jobs they tend

to it's really jobs that drive everything which is why

you should have a little bit of a marker reaction

today

When you talk about the money that uh universities are

spending you know um tens of millions have been lost

for funding for research and development

How do you balance you know the savings for what

the return on investment is for an area like here

the research triangle that they might lose

My own view is they're gonna all that research money

will be gotten back

And that's being used to torture these universities to do

other things like fight anti-Semitism you know be a little

less woke uh and stuff like that but they have

you know Columbia has it back

Uh I read yesterday someone else just got it back

Harvard just settled

Harvard settled too

They settle

They settled

I don't know if they got the research back but

they did settle Brown Brown University

So I think you're gonna see this hopefully and I

I don't think they should be torturing people in R&D

You know but on the other hand there are a

lot of examples where the R&D money was intended for

X and was used for Y

And that you know if you're if you're a JP

Morgan or universe anyone you should justify what you do

They shouldn't just have a knee jerk reaction

You can't take my money

They just say well you know what you were right

We we should we misapplied some of it and we're

gonna have very strict standards that when the government gives

us money for R&D it's used for that purpose and

not you know to fund other social programs

How important is that money when properly spent towards the

growth of an area like it's critical for the United

States of America

I mean that you know R&D university R&D has been

critical for almost every industry

Particularly basic research I mean that's that's the it's basic

research that is it's harder to put an ROI on

and invest as a business but if that basic research

layer is there all the applications that sit on top

of it that's where you can invest with confidence

And that was where after World War II was a

deliberate strategy to put basic research in universities and have

the government fund it

You know other governments have done it other ways but

that's what we did and that's what the expertise is

so

Um I wanted to jump back into North Carolina specifically

You mentioned your your two daughters went to Duke

So you spent a lot of time in the triangle

and you know North Carolina

I'm sure you know Charlotte very well

Um what what keeps you coming back here What do

you like most about our market But I used to

love coming here is going to the Duke and having

a martini when I got there like and then walking

around that is a beautiful walk around the campus stuff

like that so

No we this this is I mean obviously my daughters

went here and have a you know love for the

school but this is this is business you know like

and I if you travel around America and you guys

go to any small town and big towns like that

it is extraordinary

It's happening in those towns and it's very different than

you know the big media rhetoric you get in Washington

New York LA or San Francisco but you should read

the book by James Fallows called Our Towns

He goes to 50 towns

I I I assume Raleigh Durham was on that list

No none bigger than Columbus

Uh he flew there with his wife

He writes for The Atlantic uh and wherever he went

he he expected to see it to stop big dark

America like it was like 2018 or 2019

And what did he see Local communities working together building

parks uh bringing in businesses trying to fix their local

problems with schools or crime or or uh you know

work skills for kids and it works and that was

true in Kansas Saint Louis and Spokane and Boise and

Bozeman and Austin and Fort Worth and Raleigh Durham Greenville

Huntsville There are a few places that isn't working great

but often it's not working great because they're not collaborating

locally

Is there any big economic development that you're seeing here

in North Carolina that we should expect Uh I wouldn't

know the answer to that

You have to ask people who are actually here

Um well one thing about North Carolina I'm sure you

saw Tom Tillis announced he's not gonna be running

Uh JP Morgan has you know donated money to Tillis

in the past

I mean what what were your thoughts when you heard

that he wasn't running and what do you see for

the future We're gonna lose a great senator

He he he's a he is a top professional and

you he's doing

I'm sorry he's not running but he obviously has good

do what's right for him and um

I'm sure we'll be in touch with them in the

future too

Will you support somebody in that race or are you

still an open book on maybe yeah

Uh what are some of your favorite parts of North

Carolina you mentioned You guys you guys asked me too

many questions about North Carolina

I mean you've you exhausted my knowledge

But but wherever I go I remind everyone people love

their own cities and they want to see them thrive

and they wanna see them which is great that's true

around the world and and um

I think Boone is the most underrated college town in

America

Who Boone it's beautiful Boone North Carolina where Upstate is

Excellent

So he knows more than I do about it

Well I've just been there but but but universities are

Always a hotbed of kind of growth and technology and

startups and and it's much more true today than it

was you went back 30 years ago and you know

back then it was like Silicon Valley and Boston now

it's everywhere and this and here you started much earlier

too going way back the the uh triangle here

So are you surprised that since you opened in Chapel

Hill No I I that was like 5 years ago

Were you there too Yeah uh no it was it's

been you know these these branch expansions you look at

the branch expansion was always the branch but it's also

we bring in commercial banking investment banking private banking payment

systems our our technologies and they've just been going great

and then we also then we can bank once we're

in the state we can bank your hospitals your schools

your cities your state which we do do we do

affordable housing

Uh um here we're large and affordable housing here

So once we start it becomes part of an ongoing

effort

It's been

I was not sure when we started all these expansions

how it would turn out

It was possible that they were some of them would

have been a mistake and we would have changed our

plans but obviously they work quite well and we're in

48 states and we're quite happy with it

There's actually been no area we've gone into that we've

been disappoint we might have been disappointed with a specific

location or a particular branch but every community we've gone

into we're still there and we still see opportunity

Is that like maybe like 2 minutes left one thing

that I think we haven't touched on and you guys

would like to is um the bus tour that Jamie

and Ben are on um this is the last stop

on that bus tour and um you know that might

be something to talk about from a localization perspective

Yeah I think from you know you're here you're gassing

up North Carolina and I get that but I I

mean how important is North Carolina in what you see

for your future when you've been you know all over

the country in a lot of places with this bus

tour Yeah

I think it's been a great place for us to

expand all the things I mentioned

And remember when we come here we bank also bank

your companies in other states and around the world

So when we bank some of these companies you'd be

surprised how much business we can get but not here

sometimes elsewhere and so uh but it's just part of

a huge investment in America

It's not unique to North Carolina even though I think

North Carolina's done exceptionally well relative to many other places

but if you look at it you know Nevada uh

Texas Georgia

South Carolina North Carolina Florida that Crescent has been doing

very well much better than you know some of the

West Belt states etc

Um And the other thing which we always want is

we want the local people to

To have inspire what they want you know to have

ambition to what they need to do here

They have to tell us what to do here

We don't always know but you know you guys would

know is a new neighborhood coming up is a a

university start a new class or something that we should

maybe start hiring people from or

Uh so and that's how we expand

They tell us we need a new branch here and

we need more bankers and we need we can cover

more people

They do a lot of research on you know how

many companies are in the target range in North Carolina

and my guess is a small business talking about hundreds

thousands and and growing very fast

This is not about the bus tour but I wanted

to ask you next year marks 20 years since you've

been CEO I think

How do you stay energized in this job and what

keeps you uh what would you say what what makes

you the most excited right now Well what keeps me

energized I don't know

I just you know I I I'm just what I

am

I'm not sure I can actually answer the question

I still wake up

I like working

I like having purpose

I like uh getting out and seeing people

Um I love this country and that that motivates me

a lot and my biggest contribution to this country is

either through my family if these kids do great or

if this company does great and this company can do

things for everybody and we do things for hiring and

veterans and

Military companies and corporations and and that inspires me as

long as I can do the job with full effort

you know I love I love doing it and we

do it around the world we uniquely get involved in

public policy

So if you look at through my chairman's letter we

go through a lot of public policy issue would help

make America a better country to help all of our

citizens you know from high paid and private banking citizens

to to lower income citizens and I find that very

motivating

What's the first thing you eat in the morning All

right I can't confess this

Uh I'm gonna tell you and when I every time

I say it the New York Post loves it but

I only flick through it for the pictures you know

I know I actually do read some of the editorials

and stuff like that but I also read the New

York Times The Washington Post the Financial Times and the

Wall Street Journal and then I read a lot what

And Axios and then and then I read a lot

of other yeah I always read Axios and and a

lot of other stuff I research reports and people send

me stuff and

I mean I read for hours every morning no matter

where I am I wake up early and I do

that reading just makes me feel better

What's a what's a reading right now Yeah I I

just finished I actually finished a while ago

I'm just gonna mention it because it's important is Ike

Eisenhower's granddaughter wrote a book How Ike led and it

goes through how he ran things and how he did

things and how he thought about things and it's really

good because it teaches you a lot about real I'm

gonna say professional management and leadership and in particular like

in the White House and he had top people around

him you know it wasn't all academics it wasn't all

politicians had business people he had professional scientists he expected

a lot from them

He always constantly met with the opposition party all the

time

You know to understand what they're thinking what they're feeling

was never allowed and never allowed himself to be weaponized

or or uh um you know put in a bad

position is always quite careful uh and it's it's always

instructive to see what you know some of the great

leaders in history did and you can do the same

thing if you read Abe Lincoln who I always find

I find probably one of the most interesting people on

the planet

Nelson Mandela gets out of jail for 27 years including

being tortured

And you know people I I remember when he was

getting out people thought to be civil war that there's

no chance it wouldn't be civil war in South Africa

and he created an environment of peace you know and

so yeah these people you learn a lot from reading

history in my view

I I just read a book called About Time which

is about how humans engage with time through um material

interaction with the world so it has nothing to do

with business

Yeah I I I love I agree with you

I love

I mean do you ever read Short History of Nearly

Everything by Bill Bryson Fabulous or Guns Germs and Steel

like how we all got here and what we learned

is fabulous stuff

I mean it blows your mind when you read it