Earnings season commenced amidst notable market volatility, a quarterly event typically primarily engaging professional investors. This period, however, acquired amplified significance and anticipation this week due to the market disruption accompanying the escalating trade tensions between the United States and its key trading partners. The focus intensified particularly on JPMorgan, recognized as the nation’s largest bank, which was among several financial institutions reporting quarterly results on Friday.
JPMorgan’s leader, Mr. Dimon, known for his candid communication style, has publicly affirmed prioritizing his country over his professional role. His remarks this week appeared to offer different perspectives depending on the audience. In his annual shareholder letter, disseminated on Monday, he cautioned that Mr. Trump’s confrontational rhetoric could potentially diminish America’s global standing. Simultaneously, he acknowledged the existing challenges related to trade imbalances.
Just two days later, during a rare interview on Fox Business, Mr. Dimon highlighted certain benefits associated with some tariffs. Mr. Trump later mentioned watching this interview shortly before announcing a 90-day suspension of tariffs affecting most countries, with the notable exception of China. By Friday morning, Mr. Dimon’s position seemed less settled. Speaking during calls with reporters and Wall Street analysts, he issued a warning that the economy faced “considerable turbulence” stemming from the tariffs. Yet, he also echoed some of Mr. Trump’s assertions that the immediate instability was not a cause for concern.
The stock market has experienced significant declines following Trump’s “Liberation Day” tariff announcement on April 2. This announcement preceded a sharp market reaction, pushing the Nasdaq into a bear market and causing the S&P 500 to fall by 10% over two trading days. However, even prior to this significant market shock, stocks had encountered difficulties this year. This underperformance occurred as the increasing reality of Trump’s determined intent to impose tariffs across a broad spectrum of partners and goods became evident.
In response, investors had dedicated a considerable part of the year to seeking the “Trump put.” This concept refers to the specific stock market level that would likely prompt the administration to reverse its tariff strategies. Nevertheless, the stock market might not be the suitable indicator to trigger such a reaction from the administration. According to JPMorgan strategists led by Dubravko Lakos-Bujas, in a note to clients on Monday, “The lack of the Trump Put and disregard for stocks has further fueled the relentless selling.”
Their note proposed an alternative perspective, suggesting, “However, the Put may have shifted to the crypto market which so far has been relatively resilient.” In their analysis, the JPMorgan team revised their year-end price target for the S&P 500 downwards, from 6,500 to 5,200. The firm’s economics division had previously become the first on Wall Street to project a US recession occurring this year. Administration officials, particularly Treasury Secretary Scott Bessent, have indicated that Treasury yields serve as the primary financial metric for the second Trump administration. The notion from Trump’s initial term, which viewed the stock market as a gauge for his economic policies, appears to be absent this time around.
On Sunday, when questioned by reporters about the stock market decline, Trump likened it to needing to take medicine to recover. Looking back to early March, as investors prepared for Trump’s initial tariff announcements, Bank of America strategist Michael Hartnett floated the concept of a “bro bubble” in stocks. Hartnett posited the first “Trump put” for the S&P 500 would materialize at 5,783, corresponding to the closing level of stocks on the day of the election.
In afternoon trading on Monday, the S&P 500 was trading near 5,075, suggesting that level had been surpassed. However, bitcoin appeared to align more closely with the spirit of Hartnett’s idea. Early Monday, bitcoin briefly traded below $75,000, a level not seen since early November, following its rally after Trump’s election victory. While stocks regained some ground throughout the trading session, bitcoin’s intraday recovery was more pronounced, with the leading cryptocurrency positioned near $78,600 in late afternoon trading.
Prior to Monday’s market downturn, bitcoin had only momentarily dipped below $80,000 in early March. For the preceding month, it had largely maintained levels in the low $80,000s, even as the stock market gradually lost momentum. The possibility of Trump establishing a crypto strategic reserve was also noted as a factor that might assist crypto markets in attracting buyers during periods of market unrest. However, as an asset class, cryptocurrency was described as simply better suited than the stock market to function as a sentiment indicator.
Stocks, which represent fractional ownership in actual companies, are influenced by expectations regarding the real-world consequences for businesses across diverse industries and locations, grappling with increased costs and greater uncertainty. While sentiment undeniably impacts the price of every stock, the wider economic backdrop and the fundamental complexities confronting any business as a result of significant policy shifts cannot be disregarded. This dynamic, however, was seen as not necessarily applicable to cryptocurrency.
While bitcoin has at times this year moved in tandem with the broader market, and specifically with technology stocks, it possesses the advantage, as an asset class, of being able to genuinely and credibly look beyond potential earnings-level disruptions possibly caused by higher tariffs. Instead, it can reflect the collective sentiment of an investor class attempting to find stable ground. On the day preceding Trump’s November 5 election win, bitcoin was trading just under $70,000. Since that time, bitcoin has not closely approached that level. And until financial markets find a clear footing, the true location of the “Trump put” may remain uncertain.
This situation was described as a daunting prospect for the stock market, yet one that potentially emboldens Trump. Beyond market dynamics, Jamie Dimon, CEO of JP Morgan, reportedly expressed strong disapproval towards employees who initiated a petition seeking to reverse the financial institution’s recently implemented five-day return-to-office requirement. During an animated town hall meeting on Wednesday, the 68-year-old executive was questioned regarding the petition, which had accumulated approximately 950 signatures.
In a recording reviewed by Reuters, Dimon’s response was direct: “Don’t waste time on it. I don’t care how many people sign that petition.” Employees at the nation’s largest bank have reportedly voiced dissatisfaction on internal message boards and chat platforms about the loss of their hybrid working arrangements. Dimon emphasized the need for enhanced efficiency and underscored that employees retain the option to continue their employment at JPMorgan.
He urged employees not to harbor resentment towards him concerning the reversal of remote working policies, stating that it was a free country. Dimon asserted that staff had not been fully attentive during Zoom meetings, contributing to reduced efficiency and creativity. He further indicated that the implementation of in-office requirements would not be delegated to managers, stating, “There is no chance that I will leave it up to managers. Zero chance. The abuse that took place is extraordinary.”
