‘Prepare For The Worst And Hope For The Best’: How JPMorgan Chase Exec Views Today’s World
Since the dawn of the stock market, financial advisers have cautioned investors not to get distracted by geopolitical events that are outside of their control. That bit of wisdom remains true today, but it doesn’t mean it is a good idea to put one’s head in the sand in the hope that events such as the war in Ukraine or the threat of inflation will not impact the market.
Instead, said Mary Callahan Erdoes, CEO of JPMorgan Chase’s asset and wealth management business, smart investors and their advisers need to understand and prepare for the risks they face in today’s world. Appearing on this week’s Walker Webcast with Walker & Dunlop CEO Willy Walker, Erdoes shared her thoughts on a range of topics including risk management in light of current events and JPMorgan Chase’s plans for a new headquarters.
A 25-year veteran of JPMorgan Chase who today oversees $4T in client assets, Erdoes has faced her share of market challenges. Still, words like “confused and uncertain” best describe the investment community’s mood at the moment, she told Walker.
Erdoes and her team at JPMorgan Chase meet daily to assess global events’ impacts on markets. Their goal — and her advice for investors — is to stay on top of current events and game out the effect they could have on investments.
“How you think about it and how you prepare for it are the most important things, [including] having dialogues with people about how they're preparing for various scenarios,” Erdoes said. “What's going to happen in the upcoming months or next year is very, very uncertain at this point. But how people are managing risk and their being there to help clients are the most important things.”
That approach has helped JPMorgan Chase and others in the financial services industry navigate the unknowns of the pandemic. The outbreak of war in Europe, however, adds new uncertainties about how events might impact gross domestic products, interest rates and other key metrics.
“Our job is to always prepare for the worst and hope for the best,” she said. “If you do it the other way around you're going to get yourself in big trouble. That's how we are wired and that's what we do during every time that we face a risk that is a little bit less certain than the one that we faced the day before or the year before.”
Walker responded that he was taken aback by Erdoes’ somewhat “pessimistic” tone. After all, he noted, geopolitical events “tend to come and go” and markets have a way of correcting for these disruptions.
Erdoes said Walker was “100% right.” This time, however, the impacts of current events are harder to quantify and longer-lasting, she said.
“The question is how long will inflated oil prices affect the world and what are the shifting dynamics,” she said. “You've got natural gas issues all across Europe and basically everything that you think about in terms of pricing stability is out the window right now and gas and electric prices are up roughly fourfold.”
Where does that leave investors? Erdoes stressed that in spite of her heightened vigilance, she is not bearish on the markets. But the current situation means that organizations — both business and government — need to carefully assess their risks so that they don’t become complacent.
“I think there's a whole population of people out there today who don't know anything but a bull market in bonds and low interest rates, and that could change very, very quickly,” she said. “And when interest rates change it affects the pricing of every financial services instrument.”
It falls to people like Erdoes to stay on top of these changes while also taking the long view, she said, to make sure the client portfolios she oversees today will be here in a century.
Erdoes and Walker also discussed JPMorgan Chase’s long-range commitment to New York City, where it plans to open a new headquarters building at 270 Park Ave. by 2025. The 60-story skyscraper will be powered entirely by renewable energy.
“As we thought about what we were going to create, it was about something that was going to be an example to the community for the next 100-plus years,” she said. “We hope that we make something that everyone in New York can be proud of. And we’re proud of the 8,000 construction jobs we are creating in the city.”
On April 27, Walker will interview author Mo Gawdat, former chief business officer for Google X. Register here.
This article was produced in collaboration between Studio B and Walker & Dunlop. Bisnow news staff was not involved in the production of this content.
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