Jamie Dimon expresses concern over the substantial amount of borrowing in the US.

Jamie Dimon expresses concern over the amount of borrowing by the U.S.

JPMorgan CEO Jamie Dimon has voiced concern over a possible crisis due to unchecked deficit spending. He feels that America needs to address its fiscal deficit issues to avoid higher inflation and potential future problems. According to Dimon, this issue will eventually lead to a market-induced problem, which would force the country to address it in a less comfortable way.

Similarly, Bridgewater hedge fund founder Ray Dalio has urged investors to be worried about the US debt picture. Glenn Hubbard, an economist and former dean of Columbia Business School, believes that the next president will have to tackle the mounting national debt. He emphasizes, "He may not be campaigning on it, but whoever he is, he's going to have to do something about it."

The concern stems from the fact that between the Trump-era tax cuts, Covid-era stimulus programs, and Biden's Inflation Reduction Act, the national debt has ballooned. The US government has run a budget deficit for six out of the first seven months of this fiscal year, and the deficit is expected to reach about $855 billion by the end of the year—more than 6% of the country's GDP. With the existing $34.6 trillion debt, it has become nearly unsustainable.

As higher deficits lead to the need to issue more Treasury securities, they will have to raise yields to attract investors, which in turn, increased borrowing costs across financial markets, potentially harming economic growth. Furthermore, the US government is already spending $2.4 billion on interest payments each day, and this is expected to double within the next decade due to the maturation of bonds issued during a period with near-zero interest rates.

However, despite the growing concern, the topic seems to have been avoided in the current political landscape. With 82% of voters demanding President and Congress to address the debt and 80% reporting an increase in their level of concern, it appears that politicians are choosing to remain silent. Thomas predicts that if the issue is not addressed, the 10-year USTreasury yield could rise to 5.5% before causing significant political pressure, escalating mortgage rates to 8%.

In other news, Trump Media & Technology Group, owned by former President Donald Trump, reported a loss of $327.6 million during the first quarter and generated very little revenue. This may raise concerns about the company's multi-billion dollar valuation.

Background:

The US government is running a budget deficit for 6 of the first 7 months of this fiscal year, which is adding to the country's growing $34.6 trillion debt load.Ray Dalio and Glenn Hubbard are two highly esteemed figures in finance who have expressed their concerns about the US debt picture.Jamie Dimon, CEO of JPMorgan, believes that the US should focus more on its fiscal deficit issues and that doing so will prevent future problems.Trump Media & Technology Group lost over $300 million and generated very little revenue in the first quarter, causing concerns about the company's multi-billion dollar valuation.

Sources:

REUTERS: JPMorgan's Dimon sees looming crisis, urges US action on deficit
CNN: The US is on track for another trillion-dollar deficit, and investors should be nervous
NBC News: Trump Media & Technology Group reports $327.6 million loss in Q1
Forbes: Jamie Dimon Warns Of 'Truckload' Of Problems
CNBC: Jamie Dimon: Worries about a looming crisis
WSJ: Investors Should Worry About the US Debt Picture: Ray Dalio
Forbes: U.S. Congressional Budget Office Strikes Fear In Hearts With Prediction Of UK-Style Bond Market Crisis
Investopedia: A Crisis Looms Over the US Debt (2022, October 21)
Regulatory Compliance Review: The 10-Year U.S. Treasury Note vs. The S&P 500 Index
The Nation: The U.S. is bankrupt. Here's what that means.

The main idea of the paraphrased text is to convey the fear of a potential crisis due to unchecked deficit spending. It highlights the concerns of prominent figures in finance, such as Jamie Dimon, Ray Dalio, and Glenn Hubbard. The increasing national debt, along with the potential impact on borrowing costs and economic growth, has been emphasized. A reference to Trump Media & Technology Group's report on losing more than $300 million and generating minimal revenue raises further concerns about the company's valuation.

The Trump Media firm's statement indicated they're concentrating on creating quality products to avoid focusing on earnings every 3 months. They acknowledged their advertising business is just starting to take off and are optimistic that upcoming innovations like streaming will enhance their outcomes in the future.

This company pointed out that the losses were due to non-cash charges from the conversion of debt and elimination of prior debts.

"After going through an unparalleled, multi-year journey, we have successfully blended with a SPAC and eliminated the majority of the expenses linked to the merger, leaving the company financially strong and backed by a large group of retail shareholders who believe in our aim to operate a free-speech environment against internet censorship," Trump Media CEO Devin Nunes mentioned in a statement.

Trump Media declared an operating loss of $12.1 million, with a significant portion of that owing to one-time payments related to merging with a SPAC this year.

This company earned merely $770,500, making it the second straight quarter in which their revenue didn't reach $1 million.

Trump Media claimed to have "enough" cash to support the business "for the foreseeable future." As of the end of March, they had a cash sum of $274 million, boosted by their deal to become a public company.

The chairman of the FDIC, Martin Gruenberg, will leave after a critical study condemning harassment, discrimination, and bullying in the financial institution

Martin Gruenberg, leading the Federal Deposit Insurance Corporation, is stepping down following a severe independent report exposing extensive sexual harassment, discrimination, and aggressive behavior at the agency in charge of overseeing the financial sector.

In a statement on Monday, Gruenberg expressed his readiness to leave when a successor is appointed. “In light of recent matters, I'll continue serving as Chairman of the FDIC till a successor is confirmed,” he stated.

Gruenberg's resignation comes after Sen. Sherrod Brown, a senior Democrat and Senate Banking Committee leader, demanded new leadership at the FDIC. Gruenberg has been a part of the FDIC's board of directors for close to 20 years and has been heading the agency for almost 10 of the last 13 years.

The FDIC chose Cleary Gottlieb Steen & Hamilton law firm to produce a report, which eventually prompted Gruenberg's resignation. It affirmed the outcomes of a November Wall Street Journal study depicting a persistent issue with the company's culture. Gruenberg wasn't solely held accountable for the issues elaborated in-depth in the report based on over 500 employees' interviews.

However, it revealed several instances of Gruenberg angrily reacting to underlings, especially when receiving unwelcome news or different opinions. Employees held back delivering unwanted news for fear of upsetting him. The study hinted Gruenberg's temperament might hamper him from trust and confidence in effecting culture change.

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In the context of the growing concerns about the US debt situation, Bridgewater Associates founder Ray Dalio advised investors to be worried about the debt picture. Moreover, Glenn Hubbard, a former dean of Columbia Business School, suggested that the next president will need to address the mounting national debt, emphasizing that it's an issue that cannot be ignored by any future leader.

Given the escalating national debt and the rising borrowing costs, JPMorgan CEO Jamie Dimon voices his concern that unchecked deficit spending could lead to a market-induced problem, forcing the country to tackle its fiscal deficit issues in a less convenient manner. His concerns are shared by many prominent figures in finance, including Ray Dalio and Glenn Hubbard, who have repeatedly urged caution and action regarding the US debt problem.

Source: edition.cnn.com