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(JPMorgan CEO) Jamie Dimon's annual letter always serves up some food for thought and this year is no different...
It's a 65 page letter so we won't cover everything...
Aside from comments on the wider economic landscape this really stood out:
Banks already compete against a large and powerful shadow banking system.
And they are facing extensive competition from Silicon Valley, both in the form of fintechs and Big Tech companies (Amazon, Apple, Facebook, Google and now Walmart), that is here to stay.
As the importance of cloud, AI and digital platforms grows, this competition will become even more formidable.
As a result, banks are playing an increasingly smaller role in the financial system.
So, what does a big bank with a yuuuge balance sheet do in this situation?
We have mentioned that our highest and best use of capital is to expand our businesses, and we would prefer to make great acquisitions instead of buying back stock.
We are somewhat constrained by how much we can grow our balance sheet because our capital charges will grow with our size, so sometimes buying back stock may still be the best option.
But acquisitions are in our future, and fintech is an area where some of that cash could be put to work – this could include payments, asset management, data, and relevant products and services.
Could Plaid be a target?
They were set to be acquired by Visa last January, but anti-trust regulators stepped in and blocked the purchase...
Around the same time, Dimon called Plaid out for improper use of data...
Dimon added that in some cases, the new players were “examples of unfair competition” that the bank would do something about eventually.
He included players that take advantage of richer debit-card revenue for small banks and firms Dimon accused of not taking precautions against money laundering.
He specifically called out Plaid, the payments start-up whose acquisition by Visa recently collapsed, saying “people who improperly use data that’s been given to them, like Plaid.”
When contacted for further comment, a Plaid spokeswoman said the company is “focused on ensuring people have access to their own financial information so they can securely share it with permission in order to use the fintech apps they choose.”
She added that “data privacy and security are core to everything we do, including the data exchange agreements we have with JPMorgan Chase among many other banks.”
Is Dimon really worried about Plaid and how they use data...?
Or has he been enviously admiring from afar and about to make his move?
If the JP Morgan to acquire Plaid headlines hit, remember that you heard it on Macrodesiac first...
Money can't buy you love.... or a shipping slot at these prices! 👇
The squeeze will continue - Wells Fargo noting the increase in vehicle production costs too...
❓ Can companies pass these costs onto consumers?
If they can't what does this mean for their profits...?
Think Bitcoin is going to crash? Hedging is getting cheaper... 👇
Bidens' tax plans have been as well received as a kick in the nadgers...
Raytheon's CEO: “It means I have to reduce my investment budget by about 20%, I’m not sure that’s exactly what the president wants to have us do”
“It’s a pretty simple discussion, if you want U.S. companies to invest in technology and innovation, you have to have incentives to do that here in the United States.”
The Tax Foundation warn that the current policy proposals could actually drive U.S. companies offshore again, undoing the benefits of the 2017 tax reform...
Whereas prior to tax reform companies had a clear incentive to offshore their intellectual property, GILTI and FDII are meant to change that incentive so there is a balance between keeping IP in the U.S. or placing it offshore. In fact, because of the layers of the tax burden on GILTI, FDII can make the U.S. a relatively more attractive place for owning intellectual property for some companies.
Last week, the Biden administration announced that it would increase the tax rate on GILTI to 21 percent and eliminate FDII while increasing the U.S. corporate rate to 28 percent. If adopted, these changes would dramatically upset the balance set in 2017. Immediately, a U.S. company would recognize that paying taxes on intellectual property profits at a foreign 21 percent rate would be better than paying a 28 percent U.S. domestic rate.
If a company responded to the incentive by moving its intellectual property outside the U.S., it is possible that the associated R&D and manufacturing could follow.
Full article here 👇
Looks like we're set for some LONG negotiations (and that global minimum tax rate is probably pie in the sky...)
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Aaaaand I had a great chat with Dale Pinkert at ForexAnalytix - give it a watch/listen...
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