Dimon Warns On Credit Cracks After Tricolor Bust

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00:00Let's stay there and take a deeper dive into Jamie Dimon's warning.

00:03He mentioned the collapse of Tricolor, weighing on the bank's third quarter results,

00:07triggering a $170 million charge-off that pushed credit costs higher.

00:12Dimon also said that when you see one cockroach, there are probably more.

00:16Everyone should be forewarned on this one.

00:19So let's talk about those credit concerns.

00:21Banks and asset managers have reported earnings this morning.

00:23We've got a roundtable.

00:24Bloomberg's senior Wall Street correspondent Shridhar Nadarajan,

00:28Irina Garcia-Perez, who covers credit,

00:30and Neil Sipes of Bloomberg Intelligence, who covers the asset management firms, joins us now.

00:35Shri, let's start with you.

00:36Dimon is the senior statesman of Wall Street.

00:40He kind of speaks for the industry as a whole.

00:42And what struck me is that so many people, when I talk to them in the credit markets,

00:46are kind of dismissive of Tricolor and First Brands, saying it's very idiosyncratic,

00:50there's a lot of dispersion in the credit markets.

00:52Dimon is really laying the line, saying that there's something to this.

00:57There might be more concern here.

00:59And there's a reason for that, right?

01:00When the going is that good, people like Jimmy Dimon are in that seat

01:04because they've learned to look around the corners.

01:06And if you actually look at the bank's results,

01:09set aside the $170 million charge-off tied to Tricolor,

01:13the overall results, the bank is on track for another record year when it comes to revenue.

01:18It is another very strong year for JP Morgan.

01:20So when you look at the underlying numbers,

01:23you will be hard-pressed to find any serious signs of stress.

01:26But what Jamie Dimon is saying is when you have like a Tricolor kind of situation or a First Brands,

01:32he says in his exact words, my antenna goes up when I see something like that.

01:36And to your earlier point, when there's one cockroach, there's probably more.

01:40And that's what's got everyone worried.

01:42And more surprisingly to me, you know, the last week, two weeks,

01:45we've all been spending time on BDCs tied to the private credit market

01:50because that has been the topic du jour in the Twittersphere.

01:53But it has suddenly gone from there to the commentary from the most senior banker out there

01:58when he talks about the need to look at this growing discount to NAV on a lot of these BDCs

02:04and whether that can put in more trouble and stress and strain in markets.

02:08That's when everyone will start paying attention to it.