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CC-Transcript

  • 00:00FRANCINE: FIRST OF ALL, YOU HAVE THIS PROMOTION, YOU ' RE NOT THE COPRESIDENT. HOW WAS THE JOB GOING -- HOW IS THE JOB GOING? DANIEL: VERY GOOD. WE ARE REALLY WORKING TOGETHER TO HELP JAMIE. WE ARE WORKING ON VARIOUS ISSUES ACROSS THE COMPANY. IT IS A GREAT GROWTH AND WE ARE ALL WORKING TOGETHER VERY WELL. FRANCINE: IS THERE ANYTHING YOU ARE FOCUSING NOW THAT YOU ' RE NOT BEFORE? DANIEL: TECHNOLOGY IS A BIG AGENDA FOR THE COMPANY. WE ARE DOING PRIORITIZATION ' S OF THE COMPANY. ISSUES ABOUT -- THINGS THAT ARE COMMON ACROSS THE DIFFERENT LINES OF BUSINESS. FRANCINE: I WANT TO GET BACK TO TECHNOLOGY AND ARTIFICIAL INTELLIGENCE, BUT FIRST THE MARKETS, DANIEL. WE SAW THE TARIFFS IMPOSED BY DONALD TRUMP. WHAT DOES THAT MEAN FOR THE MARKETS? DANIEL: MARKETS ARE IN GOOD SHAPE. WE HAD IT READ A VOLATILITY -- PERIOD OF A VOLATILITY. MARKETS ARE DOING WELL AND NOW A VOLATILITY HAS COME DOWN A BIT. WE ARE AT AN INTERESTING TIME. WE ARE TWO YEARS, PROBABLY, UNTIL THE END OF THE CYCLE. MARKETS ARE GOING TO BE NERVOUS TO ANYTHING RELATED TO INFLATION. THEY ARE GOING TO BE NERVOUS ABOUT ANYTHING RELATED TO TARIFFS. IT IS SOMETHING THAT WILL CONCERN THE MARKETS. FRANCINE: WHAT HAPPENS AT THE END OF THE CYCLE? IS THERE A CORRECTION AT THE END OF THE CYCLE, OR WILL MARKETS ADAPT AND ADJUST? DANIEL: NORMALLY THERE IS A CORRECTION IN ANY CYCLE AND IT DEPENDS ON HOW HIGH THE MARKETS ARE. THERE IS NEVER JUST ONE TRADER, AND IT ' S ALWAYS A COMBINATION OF FACTORS. IT COULD BE. NORMALLY IN THE CYCLE, PROBABLY THE EQUITY MARKET IS STILL TOGETHER FOR THE NEXT YEAR OR TWO. THEY COULD BEAT CYCLE, PROBABLY THE EQUITY MARKET BETWEEN 24%, DEPENDING ON THE VALUATION AT THE TIME. THE MOST IMPORTANT THING FOR PEOPLE LIKE US IS JUST TO BE PREPARED. TO BE PREPARED IS WHAT IT IS, AND THAT IS THE MOST IMPORTANT THING. WE KNOW THERE WILL BE A CORRECTION HAS SOMETIME. FRANCINE: WE WERE EXPECTING UP TO A 40% CORRECTION. HOW DO YOU PREPARE FOR YOUR CLIENTS? DANIEL: I THINK BY BEEN DISCIPLINED. FOR US, BECAUSE THE CYCLE -- WITH THE AMOUNT OF -- THAT WE -- AS A COMPANY. WHEN IT TO BE CAREFUL OF HOW WE ARE POSITIONED IN ORDER TO BE ABLE TO THE LIQUIDITY PROVISION. WHEN THERE ARE DIFFICULT TIMES, THE CLIENTS REQUIRE MORE, SO THEREFORE TO BE PREPARED AND HAVE SINCE -- TO FACILITATE THAT, YOU NEED TO REMAIN EFFECTIVE. FRANCINE: WHAT WOULD BE THE TRIGGER? ARE THE RISKS -- ARE THERE RISKS? DANIEL: THE ECONOMY CONTINUES GROWING VERY STRONGLY GLOBALLY. THE BANKS ARE BEING VERY PRUDENT IN THE WAY THEY JUST AND NORMALIZE -- A JUST AND NORMALIZE MONETARY POLICY -- ADJUST AND NORMALIZE MONETARY POLICY. YOU WANT TO LOOK AT ECONOMIC INDICATORS. IF THEY DON ' T SHOW THAT THE ECONOMY IS DRIVING DOWN, THEN YOU WANT TO LOOK AT SOME GEOPOLITICAL ISSUES THAT ARE AT PLAY. YOU WANT TO LOOK AT ALL THESE THINGS. YOU WANT TO LOOK AT VALUATIONS, BECAUSE ANY OF THE ISSUES THAT MAYBE HAVE NOT BEEN AN ISSUE IN THE PAST, THE VALUATIONS GO HIGHER, AND SO THEY BECOME AN ISSUE. FRANCINE: IS THIS A TURNING POINT IN 2018? DANIEL: I THINK NORMALLY WHAT WE SEE IN ANY CORRECTION CYCLE IS THE INTEREST RATES ARE GOING UP. CREDIT SPREADS --. WHEN YIELDS ARE SO LOW, THEY WILL GO HIGHER. WHEN YOU ' RE GETTING TOWARDS THE END OF THE CYCLE, THEY START --. EVEN WHEN THAT HAPPENS, AND NORMALLY HAPPENS AT THE END OF THE CYCLE AS WELL. IT WOULD NORMALLY A JUST AFTER EQUITIES -- ADJUST AFTER EQUITIES. I THINK THAT THE PROBABILITY OF A RECESSION IN THE U.S. IS VERY LOW. FRANCINE: WE ALSO HAVE THE MEETING TODAY. IS THERE BIGGER RISK COMING FROM EUROPE, EUROPEAN EQUITIES AND FIXED INCOME THAN IN THE U.S.? DANIEL: THE EUROPEANS ARE FIVE YEARS INTO A CYCLE. I THINK THAT THEY WILL BE CONSERVATIVE AND KEEP THEIR OPTIONALITY. CONSIDERING THE OUTCOME OF THE ELECTION IN ITALY, THEY WILL WANT TO SEE WHAT KIND OF GOVERNMENT GETS FORMED. I THINK THAT WE WILL BE AN UNEVENTFUL ANNOUNCEMENT. FRANCINE: DANIEL PINTO, THE IN AND DAY OUT WE TALK ABOUT BITCOIN. IT GOES UP AND IT GOES DOWN. WHAT WILL BITCOIN BECOME. DANIEL: FIRST THINK, IT GOES UP AND DOWN, THAT IS FOR SURE. WHEN YOU THINK ABOUT STANDING OVATIONS, THEY HAVE TO SURVEY. THIS -- INNOVATIONS THEY HAVE TO SERVE A PURPOSE. THEY CANNOT BE THAT THE PURPOSE OF BITCOIN IS TO PROCESS TRANSACTIONS THAT ARE ANONYMOUS, DIFFICULT TO TRACK, AND YOU DO NOT KNOW IF THEY COMPLY WITH THE LAW. SO THAT IS A CHALLENGE. IT IS THE TECHNOLOGY , UNDERNEATH IT, ABSOLUTELY IT IS GOING TO CHANGE A LOT OF THINGS. THERE ARE A LOT OF INITIATIVES THAT THEY ARE TRIED TO ADDRESS. -- TRYING TO ADDRESS. IT WILL NOT BE SOLVED THROUGH CENTRAL BANKS OR OTHER VENTURES. THEN IT WILL BECOME IMPORTANT. AT THE MOMENT AS IT IS, I DOUBT THAT WE WILL GO VERY FAR, BECAUSE OF THESE FUNDAMENTAL ISSUES. FRANCINE: WHAT WILL BLOCKCHAIN BECOME? IS THAT SOMETHING THAT WILL BE USED SOONER? AND WHAT FORM WILL IT TAKE? DANIEL: YES. I THINK BLOCKCHAIN ITSELF, IT WILL BE IMPORTANT FOR MANY INDUSTRIES, BUT IN PARTICULAR FOR FINANCIAL SETTLEMENTS. AND ANYTHING THAT RELATES TO SETTLEMENTS OR PAYMENTS, IT WILL BE VERY IMPORTANT. I WILL GIVE YOU AN EXAMPLE. WHERE ROLLING OUT OUR NEW PAYMENT PLATFORM AROUND THE WORLD -- WE ARE ROLLING OUT OUR NEW PLATFORM AROUND THE WORLD. ALL OF THE TRANSITIONS -- TRANSACTIONS TO PROCESS PAYMENT WILL BE --. WE HAVE BEEN WORKING WITH DIGITAL ASSETS AND BEEN VERY INVOLVED WITH THE AUSTRALIAN STOCK EXCHANGE. THE WHOLE WORLD WILL -- LEDGER. WE WILL HAVE TO PROVIDE A LOT OF SERVICES TO MONITOR THOSE EXCHANGES. I A LOT OF CHALLENGES AHEAD. IT IS REALLY A VERY POWERFUL TECHNOLOGY. FRANCINE: HOW MUCH TIME DO YOU SPEND LOOKING AT ARTIFICIAL INTELLIGENCE AND CYBERSECURITY? IT HAS BEEN -- THE MARKET FOCUSES A LOT -- SPENDS A LOT ON CYBERSECURITY. DANIEL: AND IS VERY IMPORTANT FOR EVERY COMPANY AND WE WILL TAKE IT VERY SERIOUSLY. WE WANT TO MAKE SURE THAT --. ARTIFICIAL INTELLIGENCE, ROBOT, MACHINE LEARNING, I THINK THAT AT THE BEGINNING IT WILL BE MORE ABOUT THE CAPABILITIES OF THE EMPLOYEES. IT WILL BE ABOUT IMPROVING THE SERVICE, THE OPERATIONS. YOU HAVE PLENTY OF BACK-AND-FORTH ABOUT -- WITH YOUR CLIENTS ABOUT IMPROVING THE PROCESS AND MAKING IT MORE EFFICIENT. AS WE GO DEEPER AND DEEPER INTO THIS AND WE REPLACE THE FUNCTIONS THAT EXIST TODAY, WE WILL HAVE THE RESPONSIBILITY TO TRAIN THE PEOPLE TO DO BETTER VALUE SERVICES FOR OUR TIME. FRANCINE: IF YOU GO BACK TO THE MARKET, DO WE HEARD ABOUT BACK TO HAVE THE MARKETS WERE FUNCTIONING PRE-CRISIS? WE HAD A LOT OF VOLATILITY AT THE BEGINNING OF THE YEAR. DO WE GO BACK TO WILD SPRINGS IN THE VIX? DOES IT CHANGE THE TRAJECTORY OF THE MARKET? DANIEL: WE ARE GOING TO HAVE LONG PERIODS OF VERY LOW VOLATILITY. WHAT THE MARKET ABILITY TO TRADE, THE COLONY -- QUALITY ABOUT THE RHYTHMS, IT ALLOWS US -- ALGORITHMS ALLOWS US AND EVERYONE ELSE TO TAKE ADVANTAGE, AND REALLY MANAGE THE PRICE AND EFFICIENCY. THIS IS A TIME WHERE MARKETS ARE FUNCTIONING, YOU HAVE BIG VOLUME AND VERY LITTLE VOLATILITY. WHEN THE TIME COMES WHEN SOMETHING CHANGES, THEN WE WILL SEE THE REAL EFFECTS OF THERE IS LESS CAPITAL. THEREFORE, IT WILL BE A LOT OF VOLATILITY. THEN WE WILL GO BACK TO NORMAL. I THINK THAT THIS TYPE OF MARKET THAT WE SEE, IN MY VIEW, THEY ARE HERE TO STAY. FRANCINE: ONE LAST QUESTION ON MIFID. WHAT HAVE WE LEARNED TWO MONTHS AFTER? DANIEL: NOT MUCH, YET. WE HAVE NOT SEEN ANY CHANGE OR DIFFERENCE IN EXECUTION. THE EXECUTION HAS NOT CHANGED SO MUCH, AND I THINK THAT OVERTIME WE WILL -- WHAT I REALLY LIKE IS OVERTIME IT WILL GIVE US INFORMATION TO KNOW WHAT CLIENTS REALLY VALUE. THEN WE WILL ADJUST ACCORDINGLY. WE ' RE NOT GOING TO MAKE ANY CHANGE AT ALL FOR A PERIOD OF TIME UNTIL WE SO THE REAL CHANGE -- SEE THE REAL CHANGE.
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JPMorgan's Pinto Sees Possible 40% Equity Correction in 2-3 Years

  • Bloomberg Surveillance

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March 8th, 2018, 10:34 AM GMT+0000

Daniel Pinto, who oversees the trading and investment-banking unit at JPMorgan Chase & Co., discusses equity markets, volatility, inflation and bitcoin. He speaks with Francine Lacqua on "Bloomberg Surveillance." (Source: Bloomberg)


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