00:00I want to ask you about JP Morgan and how you see the year ahead, but how do you see, you know, clients behaving or behaving differently given all these new threats on trade?
00:10Thank you very much for having me, Francine. So, as I was saying, we have just finishing a tour that is lasting three weeks across Europe and the Middle East and now in Switzerland.
00:19And it's definitely interesting the fact that as we were touring the region, no one asked any question around trade or tariffs.
00:29It was one of the main takeaway that we shared with Jimmy, too, that it seemed that we have moved on and people just want to get on with the business and run the companies and do what they have to do and not have to worry too much about tariffs.
00:45Now, they might come back in the spotlight, but I felt there was a more sanguine feeling that it is what it is. Let's just get on with life.
00:54How are you and how is JP Morgan preparing for another big year? Are you hiring more bankers? What areas are you focusing on?
01:01So, absolutely. So, if you look at what 2025 was from an investment banking standpoint, if we cover that point for a second, it was the second best year in the history from a dealmaking standpoint.
01:14Notwithstanding that you had two months, April and in October with the government shutdown where activities did slow down.
01:24So, the momentum, though, that you had for the last, I would say, quarter, last four months of the year, it definitely seems to be carrying on into 2026.
01:36And this could be one of the best, if not the best year for dealmaking.
01:40This is for a variety, I think, of different reasons.
01:42Clients are kind of looking around. They realize that financing costs are still exceptionally cheap.
01:48There is definitely an enormous backlog of transactions that could, should have happened last year.
01:53They're probably moving into this year.
01:55The large mega deals are coming back.
01:58And therefore, I feel, we feel that this will be a year important for both IPOs.
02:04Probably we're going to see much more.
02:06We were expecting those in 2025, but we feel that now 26 is coming back.
02:11And M&A too.
02:13So, yes, we are hiring across the border, across the border, in all the sectors, in all the locations.
02:20Filippo, is there something that could slow down the momentum?
02:24Probably, I would say, three things.
02:27When you speak to clients, the first is what you mentioned at the beginning, geopolitical.
02:32The geopolitical winds have been blowing for a long time.
02:37At times they blow in other directions.
02:38At times they blow in the opposite direction.
02:40So, people got used to it.
02:42Clearly, an escalation could bring a slowdown in that sense.
02:48Then, there is a lingering fear that you perceive here and there around inflation coming back.
02:56Or, potentially, the end of this fantastic credit cycle, which we have had now for the past 15 years or so.
03:05And for conditions that could materially change under a certain scenario.
03:12And a lingering fear that, oh, inflation could come back and so on and so forth.
03:15And then there is all the usual questions that you might have around AI.
03:20At what point, all the considerations around valuations, productivity, job losses, and so on and so forth.
03:27But, barring all of these, which are big considerations, I still feel the clients, the perception that I had in these two and a half weeks going around Europe,
03:39is that people want to get on with their businesses.
03:43I think it's one year to the day since President Trump got inaugurated.
03:47How are clients feeling about the administration?
03:49I know leaders here, European leaders, are under extreme stress.
03:53Clients may be different.
03:54I think definitely clients around the world are watching the U.S. economy with a degree at times of envy.
04:06Say, how can we be part of that fantastic engine of growth that is the U.S. economy?
04:11And from a U.S. standpoint, clearly the perception that the regulation and other things that can impact growth is bringing clients to the idea,
04:22let's do, let's dare to do what maybe would not have been possible years back.
04:27I think in Europe, there is more of a sense of folks, we just need to get going and do what we have to do.
04:37And you can see there's going to be probably more consolidation, I think more domestically within European countries.
04:44Cross-border is more complicated.
04:46In the Middle East, there is definitely a sense of, yes, there are opportunities right now, also for a series of idiosyncratic opportunities and what's happening in the Middle East.
04:57And then Asia, it leads through its own rhythm dictated by Japan, by China, by India, by Australia.
05:06And therefore, they are all looking at opportunity for growth also coming from the U.S.
05:12How much, we had a good, actually, earning season for a lot of the banks, but how much do you worry about a credit cycle downturn?
05:19We always worry.
05:19I mean, we are an institution of warriors.
05:23We have the warrior number one, warrior and warrior number one, who is Jamie.
05:29And it pushes that sense onto all of us, and we need to worry about everything.
05:35So, of course, you look at the credit cycle has been benign for so long.
05:40Credit spreads are at the tightest, notwithstanding all these considerations.
05:46Do you think about it?
05:48Yes.
05:48Do we see an immediate sense there could be recession in the U.S.?
05:53No.
05:53How do you prepare for it, though?
05:55We always stress every potential outcomes.
06:02Jamie wants us to be prepared for any outcome, whether it's higher rates, whether it's deflation, whether it's inflation, whether it's geopolitical risks.
06:11As someone said recently, barring probably an asteroid hitting planet Earth, we try to be prepared for everything.
06:18What makes you worried the most, given all of these potential shocks, risks, models that you play out?
06:27I think I would say markets still tend to price perfection a little bit on everything.
06:36So that's a consideration that I have, that there is this sense that everything is going to go well, notwithstanding everything else.
06:42So that's a little bit of a worry that I do have.
06:45But could we see a washout, like a big correction, or does the market automatically adjust itself?
06:51Look, if you look at some of the geopolitical things that have taken place at the beginning of the year, starting with Venezuela, markets barely reacted.
06:58Now, to some of the latest news, there has been a little bit more of an activity, but I think markets have, clients have become more, they've got their head around the volatility and they just don't overreact anymore.
07:17You have a new special advisory services team.
07:19So how are they prioritizing AI, geopolitics and sustainability?
07:23So they are prioritizing a series of services that we provide clients, not only those, also cyber, our Center for Geopolitics, other directory advisory services, and so on and so forth.
07:37The idea is to provide our most important clients with access to the best intelligence that we have on some of these various sectors or topics and provide them with those services.
07:49Again, I mean, on AI, are you looking at it from, so we talked a little bit about valuations and some of the worries there, but do you talk about it also on how it could change macro economies at a productivity level?
08:00Absolutely.
08:01You consider everything.
08:02So we are big users of AI.
08:04We have around 400 active AI cases that we are currently operating through the company as we speak.
08:12So we take from what we learn from our own lessons, what we learn from our clients, and we try to help clients around the world as they make decisions.
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