What America’s CEOs are saying on inflation: We’re going to charge you more

In this photo illustration, hands are seen counting US $100 bills.
In this photo illustration, hands are seen counting $100 bills.

  • Inflation, or increased pricing for goods, is on the rise as the economy reopens.
  • Biden’s administration and the Fed says the price increases should be temporary.
  • But CEOs of major companies are saying that higher prices could persist.
  • See more stories on Insider’s business page.

The country is reopening and the economy is recovering from the pandemic, and while COVID-19 cases are down, prices for goods and services are on the rise. President Joe Biden’s administration says this phenomenon, known as inflation, is not a cause for concern, but CEOs of major companies are warning that they’ll probably keep raising prices.

The Bureau of Labor Statistics’ monthly Consumer Price Index release showed that inflation in June was much higher than expected, with prices surging 0.9% over May, the highest month-over-month inflation rate since April 2008’s 1.0% increase. It was fueled by big price increases for used cars, beef, and pork, and the government insists it should cool down soon.

Labor Secretary Marty Walsh told Insider in early July that he’s not worried about the increase in prices for goods, especially given that wages also increased in June.

“The one thing that we are not concerned about is … inflation,” Walsh told Insider. “We’re still in transition, so we’re not concerned about that. So I think anytime we can push for higher wages – and the president’s been very vocal on this – that’s a good thing for people.”

Treasury Secretary Janet Yellen said in May that the high prices should only last through the end of this year, and Biden said during a June press conference that the “overwhelming consensus” is that inflation should “pop up a little bit and then come back down” – similar to the consensus from America’s central bank, led by Federal Reserve Chair Jerome Powell.

The economics field is not close to that consensus. Former Treasury Secretary Larry Summers has pointed to Biden’s $1.9 trillion stimulus as the “least responsible” fiscal policy in 40 years, one that could potentially trigger the dreaded hyperinflation. Increasingly, executives are saying that price increases are here to stay. Here’s what else they’re saying:

JPMorgan Chase CEO Jamie Dimon

JPMorgan CEO Jamie Dimon.
JPMorgan CEO Jamie Dimon.

JPMorgan Chase CEO Jamie Dimon said during an earnings call on July 13 that inflation “could be worse than people think.”

“I think it’ll be a little bit worse than what the Fed thinks,” Dimon said. “I don’t think it’s only temporary.”

In June, Insider reported that Dimon said the bank was stockpiling $500 billion in cash in anticipation of higher inflation, during which he expressed the same concerns with the nature of inflation, in that it will be more persistent than what people are saying.

JPMorgan did not immediately respond to Insider’s request for comment.

 

BlackRock CEO Larry Fink

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Larry Fink, the CEO of investment management corporation BlackRock, reiterated Dimon’s concerns on the nature of inflation in a CNBC interview on July 14.

“[Policymakers] are saying jobs are more important than consumerism,” Fink said. “That is going to probably lead to systematically more inflation.”

Biden has consistently touted job growth as a primary achievement of his administration so far, and Republican lawmakers have even cut off unemployment benefits early in an effort to incentivize people to return to work.

But Fink said that move takes the focus away from consumers, causing large-scale price increases.

“I’m hearing from every CEO that they have huge price increases, and they’re passing them on across the board, here in the United States and in Europe,” Fink said.

BlackRock did not immediately respond to Insider’s request for comment.

PepsiCo CFO Hugh Johnston

FILE PHOTO: Bottles of Pepsi are pictured at a grocery store in Pasadena, California, U.S., July 11, 2017.   REUTERS/Mario Anzuoni/File Photo
FILE PHOTO: Bottles of Pepsi are pictured at a grocery store in Pasadena

To help counter the effects of inflation, some business leaders are explicitly saying they’re raising prices for their goods on consumers. PepsiCo’s CFO Hugh Johnston is one of them.

“Is there somewhat more inflationary pressures out there? There is,”  Johnston said on an earnings call on July 13. “Are we going to be pricing to deal with it? We certainly are.”

The CEO of industrial supplies company Holden Lewis echoed Johnston on an earnings call the same day, saying that “based on what cost is doing,” the company will have to increase prices on consumers.

Lewis said, though, that a previous price increase the company made was received “fairly well,” suggesting consumers might not be discouraged by increased prices. 

Pepsi did not immediately respond to Insider’s request for comment.

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Investing in Square today is like buying JPMorgan in 1871 as the payment company’s Cash App realizes its growth potential, Mizuho says

Stock trader
Peter Tuchman, right, works among fellow traders at a post on the floor of the New York Stock Exchange, Wednesday, March 4, 2020.

  • Buying shares of Square today is like investing in JPMorgan at its founding in 1871, Mizuho said in a note on Thursday.
  • Mizuho believes Square’s Cash App will become the ultimate neo-bank and money center bank of the future.
  • The firm rates Square as a “Buy” with a $380 price target, representing potential upside of 59%.
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Square’s Cash App has so much upside potential that buying shares in the fintech company today is anagolous to investing in JPMorgan at its founding in 1871, Mizuho said in a note on Thursday.

“We believe Cash App may be en route to becoming the ultimate neo-bank and the money center bank of the future,” Mizuho said.

The firm sees a visible path for Cash App products to more than quintuple its average revenue per user to $200, and estimates the money sending app can capture a large portion of the US bank account total addressable market of 400 to 500 million accounts, according to the note.

Mizuho estimates that Square’s Cash App currently has between 30 and 40 million users, and that legacy banks like JPMorgan and Wells Fargo generate average revenue per user between $400 and $700, implying lots of upside potential for Square’s growth trajectory.

“With vast potential upside to average revenue per user and users, we believe Cash App’s gross profit could see 4x-8x growth over the coming years,” Mizuho explained, adding that it views Cash App as the “ultimate challenger bank.”

The product fronts Mizuho expects Square to tackle (and dominate) over the coming years includes retail crypto and stock trading, buy-now-pay-later, insurance, mortgage and auto loans, and tax services, among others, according to the note.

While the comparison between Square and JPMorgan in 1871 makes for a good headline, it’s worth noting that the predecessor to America’s largest bank didn’t go public until 1942.

Mizuho reiterated its “Buy” rating on Square and set a price target of $380, representing potential upside of 59% from Wednesday’s close. Shares of Square were down about 1% in Thursday trades, and are up 8% year-to-date.

Square's Cash App analysis
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JPMorgan beats estimates again in the 2nd quarter amid record quarter for investment banking

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JPMorgan CEO Jamie Dimon.

  • JPMorgan beat estimates once again in the second quarter, with earnings per share of $3.78.
  • The bank’s investment banking arm posted record numbers, and the firm also received a $2.3 billion boost by reclaiming money that had been set aside to cover bad loans.
  • JPMorgan boss Jamie Dimon said customers and clients were faring well as the economy reopened.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

JPMorgan again beat expectations with its second-quarter earnings, as the banking giant benefited from record investment-banking fees and the release of cash set aside to cover loan losses.

The lender’s revenue came in at $31.4 billion, it earnings showed on Tuesday. That was above the $29.9 billion analysts had been expecting but down from $33.8 billion in the same quarter a year earlier.

Net income stood at $11.9 billion in the second quarter, boosted by the release of $3 billion that had been put aside to cover bad loans, which added $2.3 billion to the bottom line after charge-offs. Net income was up 155% from $4.7 billion a year earlier.

Earnings per share came in at $3.78, above expectations of $3.21 and up 174% from the same quarter in 2020.

Here are the key numbers:

  • Earnings per share: $3.78 vs. $3.21 expected.
  • Revenue: $31.4 billion vs. $29.9 billion expected.

“JPMorgan Chase delivered solid performance across our businesses,” said Chairman and CEO Jamie Dimon.

“This quarter we once again benefited from a significant reserve release as the environment continues to improve… Consumer and wholesale balance sheets remain exceptionally strong.”

Read more: UBS names 6 bank stocks to buy as successful stress tests open the door to buybacks and dividends – and highlights 2 laggards to avoid

The Wall Street lender, the biggest in the US by assets, is seen as a bellwether company whose earnings give a sense of the health of the economy. Its results on Tuesday showed how banks are benefitting from rapid economic growth which has made much of the money they set aside in 2020 to cover bad coronavirus loans redundant.

JPMorgan’s earnings also showed that its investment banking arm fared well in the second quarter despite quieter markets. Investment banking fees rose 25% year on year to a record high of $3.6 billion, largely driven by the boom in mergers and acquisitions.

The bank’s stock was down 0.63% in pre-market trading after the earnings were released, at $157.00. It has risen more than 20% in 2021 as so-called cyclical stocks have benefited from a lifting of coronavirus restrictions and strong economic outlook.

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El Salvador’s adoption of bitcoin as legal tender poses challenges for the network, JPMorgan says

A demonstrator holds up a sign against the government's Bitcoin law during a LGBT community Pride parade on June 26, 2021 in San Salvador, El Salvador
A demonstrator holds up a sign against the government’s bitcoin law during a LGBT community Pride parade on June 26, 2021 in El Salvador.

El Salvador’s decision to adopt bitcoin as legal tender poses some systemic risks for the country and the digital asset’s blockchain, according to JPMorgan.

Doubt remains about whether the bitcoin blockchan can practically handle a significant fraction of payment activity were it to become widely used, a team of economists including Steven Palacio, Ben Ramsey, and Joshua Younger wrote in a note published Thursday.

Bitcoin trading volumes commonly exceed between $40-50 billion a day, most of this activity is internalized by major exchanges, they said, adding that on-chain transactions have averaged around $10 billion daily in recent months.

Of that total, only a small fraction represents economic activity or payment made towards a merchant.

A large chunk of bitcoin in circulation is held up in illiquid entities, with more than 90% not being used in any type of transactions for over a year “as well as a significant and rising fraction held by wallets with light turnover,” JPMorgan said.

This means only a very tiny fraction is available for use in everyday transactions.

“Though these aspects do not necessarily challenge the use of bitcoin as a store of value, they are potentially a significant limitation on its potential as a medium of exchange,” the bank’s economists said.

“Daily payment activity in El Salvador would represent ~4% of recent on-chain transaction volume and more than 1% of the total value of tokens which have been transferred between wallets in the past year,” they estimated.

The bank also highlighted a study conducted by El Salvador’s Chamber of Industry and Trade, showing that most participants would convert bitcoin to dollars for current expenses if they receive the cryptocurrency as payment. More than 90% of businesses and individuals said they would prefer usage to be optional, expressing fears of volatility and lack of understanding about how it works.

El Salvador’s bitcoin law is scheduled to come into effect on September 7. President Nayib Bukele hopes this will help the country transition into a developed nation.

Read More: ‘Trillion-dollar man’ Dan Peña breaks down the 4 risks he says will soon result in a massive stock-market crash – and shares how investors can protect themselves

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There’s ‘little sign’ that ending unemployment benefits early pushed people back to work, JPMorgan says

unemployment insurance weekly benefits stimulus checks recession job losses coronavirus pandemic
Carlos Ponce joins a protest in in Miami Springs, Florida, asking senators to continue unemployment benefits past July 31, 2020.

  • Over half of the states in the US have ended federal benefits ahead of their September expiration.
  • Many governors cited the enhanced benefits as keeping workers out of the labor force.
  • But a JPMorgan note says there’s little sign that cutting off benefits brought workers back.
  • See more stories on Insider’s business page.

Over half of the states in the US have opted out of federal unemployment benefits early, citing the programs as potentially fueling the current labor shortage.

But that doesn’t seem to quite be the case. A Friday note from JPMorgan researchers Peter B McCrory and Jesse Edgerton looks at the impact on unemployment claims and spending following states officially opting out of their benefits.

They find that there’s “little sign of any differential improvement in unemployment claims or in several spending and activity measures in these states.” There’s perhaps a little jolt in spending on restaurants – which could be chalked up to workers returning to staff up eateries – but even that estimation might still be closer to no effect.

A previous note from JPMorgan said the decision to cut off unemployment benefits ahead of their scheduled expiration in September was “tied to politics, not economics.”

The role that unemployment benefits ending has played in getting more people to work is murky. For instance, The Wall Street Journal reported in late June that the number of UI recipients was falling in states that opted out early, but Insider’s Ayelet Sheffey reported that May saw strong job growth while enhanced benefits were still in place. June also saw major payroll additions, but the unemployment rate actually went up that month. All in all, the broader impact on the labor situation is still a bit of a question mark.

On the other side of the equation are the 4 million Americans who will see some or all of their benefits cut off early. Two federal programs extended who’s eligible for unemployment benefits – notably bringing gig workers into the fold – and extended how many weeks workers were eligible to receive benefits. In many states, those programs are winding down completely this summer, leaving workers without any UI income. Workers have previously told Insider that the loss of those benefits will result in them losing their homes, or exposing themselves to risky work environments.

But some jobless Americans have struck back against benefits from being ended by filing lawsuits in several states. They’re already seeing some early wins, with judges deciding that benefits should be temporarily reinstated in Indiana and Maryland while the lawsuits proceed.

“I think it certainly has the potential to start more cases,” Andrew Stettner, a senior fellow and jobless-policy expert at the left-leaning Century Foundation, previously told Insider. “The legal argument made in Indiana was based on a set of components that were not unique to Indiana law.”

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The rotation into value stocks will get a new lease of life as the US economy booms, JPMorgan strategist says

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The US economy is booming as Americans spend built-up savings.

  • The rotation into value stocks should pick up pace again as the US economy roars, a JPMorgan strategist said.
  • Hugh Gimber said Americans with built-up savings should benefit banks and consumer-focused companies.
  • The so-called reflation trade has paused in recent days after the Fed appeared to shift its stance.
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The rotation into so-called value stocks in the US has further to run as rapid economic growth pushes up bond yields, a JPMorgan strategist has said, despite signs that the trade has cooled in recent days.

Hugh Gimber, JPMorgan Asset Management’s global market strategist, told Insider that companies in the financial and consumer-focused sectors stand to gain, thanks to Americans unleashing pent-up savings and wages rising as the economy bounces back.

“I do expect US value to outperform US growth,” Gimber said. “It’s about the laggards from last year having more scope to catch up to the rest of the pack because of the environment that we’re in.”

The first half of 2021 in financial markets has been marked by a “reflation trade“. It has seen investors pivot away from the fast-growing tech stocks that did so well in 2020, toward sectors such as energy and financials that are likely to perform better as growth and inflation pick up.

However, recent signs that the US Federal Reserve may be more concerned about inflation than previously thought have knocked the trade’s popularity. The tech-heavy Nasdaq index is up more than 5% over the last month, while the more industry-heavy Dow Jones is down around 1%.

Yet Gimber said he expects strong growth and higher inflation to push up bond yields in the second half of the year.

“You have consumers with pent-up demand, cash in their pockets, that can now get out and spend, driving a very strong outturn for growth.”

Higher market interest rates would likely make the earnings of so-called growth companies – whose full potential is often far in the future – look less attractive to investors.

The JPMorgan Asset Management strategist said rising wages would boost Americans’ spending power, benefitting companies in consumer-discretionary sectors such as luxury goods, vacations, and cars.

He said: “A healthy consumer tends to be helpful for financials, coupled with the latest news on buyback prospects for the financials and the rising yield environment, all of which bodes well for that sector.”

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The latest on JPMorgan’s big wealth-management plans

Jamie Dimon
JPMorgan CEO Jamie Dimon

  • JPMorgan, headed up by CEO Jamie Dimon, is the biggest US bank by assets.
  • The firm wants to hire 1,500 private bank advisors. It’s also making branches a part of its wealth push.
  • JPMorgan is buying UK roboadvisor Nutmeg.
  • Visit Business Insider’s homepage for more stories.

JPMorgan is the biggest bank in the US and a bellwether for the global financial system. So when the firm’s senior-most leaders talk, Wall Street pays attention.

Private banking and wealth management are a key part of JPMorgan’s future.

In the past year, the bank has hired about 100 advisors for its private-bank division, which oversees more than $836 billion in client assets and caters to individuals worth at least $10 million. JPMorgan plans to hire as many as 1,500 new advisors over the next five years, doubling its current private-bank advisor head count, Private Bank CEO David Frame told Insider.

The bank this month also said it’s buying UK robo-advisor Nutmeg, which oversees some $4.9 billion for around 140,000 investors. The 9-year-old startup already used portfolios with active and passively managed exchange-traded funds provided by JPMorgan Asset Management.

JPMorgan has big plans for employees at the bank’s roughly 4,900 US branches. The bank is aiming to have all US branches staffed with licensed relationship bankers who can offer investment advice to clients by the end of the year, Insider has learned.

Wealth management plans

MASPETH, NY - NOVEMBER 17: Shivani Siroya, Kristin Lemkau and Stephanie Cohen speak onstage at Girlboss Rally NYC 2018 at Knockdown Center on November 17, 2018 in Maspeth, New York. (Photo by JP Yim/Getty Images for Girlboss Rally NYC 2018)
Kristin Lemkau, center, the chief executive of JPMorgan’s US wealth management business.

JPMorgan is planning to significantly expand its financial advisor force, bringing the firm closer in size and scope to its rival firms in wealth management. Over the next five to six years, the bank is considering hiring as many as 4,000 advisors to roughly double its current base, US Wealth Management Chief Executive Officer Kristin Lemkau told Business Insider this fall.

Lemkau, who has been with the bank for over two decades and was previously its chief marketing officer, was named head of JPMorgan’s new wealth division in December 2019. Its various wealth businesses, including its self-directed wealth product, were reorganized under one umbrella.

Read more on JPMorgan’s wealth management plans:

Recent leadership shakeups and new hires

The bank on May 18 promoted two women to co-lead the firm’s massive consumer and community banking business: consumer-lending chief Marianne Lake and chief financial officer Jennifer Piepszak. The pair will take over running the division from Gordon Smith, who’s retiring this year from his roles as co-president and co-chief operating officer of the firm and CEO of CCB.

The moves shine a light on succession planning at the firm, as Lake and Piepszak are two of the top contenders to take over for CEO Jamie Dimon when he eventually retires. Smith had also been rumored to be in the running for the top job before announcing his retirement.

Read more:

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Melissa Goldman and James Reid

JPMorgan in May named James Reid and Melissa Goldman to be CIOs of two newly-formed groups to help modernize tech for employees.

Reid is CIO of the firm’s employee experience and corporate technology organization, which is modernizing the tech employees use internally. And Goldman, also the firm’s chief data officer, is CIO of the finance, risk, data, and controls (FRDC) technology group.

JPMorgan also hired another ex-Marcus executive, Sherry Ann Mohan, chief financial officer for business banking, CNBC first reported. Mohan, who will start August, was previously at Goldman Sachs for 15 years and most recently the CFO of the consumer business, including the Marcus brand and Apple Card..

More on people moves here:

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Retail investors are on pace to sink a record $1 trillion into stocks this year – and the flows have actually accelerated over the past month, JPMorgan says

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  • Retail investors have poured nearly $500 billion into equity funds this year, JPMorgan said.
  • At the current pace, they could be on track to sink a record $1 trillion into stocks in 2021.
  • The bank also noted that retail trading has again accelerated since mid-May after cooling off following the GameStop trading saga in January.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Retail investors could be on pace to pour a record $1 trillion into stocks in 2021, JPMorgan said.

Year-to-date, retail investors have poured approximately $485 billion into equity funds, while the retail impulse into individual stocks and options has been re-accelerating since mid-May, said a team led by global markets strategist Nikolaos Panigirtzoglou in a recent note.

A metric that measures retail buying in bullish call options rose to a record high in January at the peak of the GameStop trading frenzy. As the market cooled off, the metric subsided between February and April. Now, it has picked back up and currently sits at its highest level since January.

The record inflows come as retail investing is ultra-popular and social-media interest in “meme stocks” like AMC and BlackBerry elevates stock prices to levels that are seemingly unconnected to fundamentals.

At the end of 2020, JPMorgan estimated that retail investors would put $500 billion into stocks in all of 2021. But if the current pace of buying continues, that number could jump to $1 trillion, Panigirtzoglou said.

Read more: 2 hedge fund veterans say ‘we know how this movie ends’ as investors pile into meme stocks. They unpack their strategy for finding market outliers – which ‘made a killing’ in 2020’s volatility

Other metrics that JPMorgan uses to gauge retail investing flows also show that the state of the retail trader is stronger than ever. For example, a basket of stocks popular with US retail-trading platforms have rebounded since mid-May and have outperformed the S&P 500 since March 2020. (JPMorgan did not disclose the individual stocks in the basket.

Also, the performance of a portfolio with 50% allocated to the Nasdaq and 50% to the Russell 2000 has outperformed the S&P 500 and rallied since mid-May. JPMorgan said this 50/50 split between tech stocks and small caps reflects the barbell trade that retail investors tend to favor.

However, it remains to be seen if the pace of retail investing will continue throughout 2021, and what areas of the stock market it will be concentrated in.

Vanda Research doesn’t see meme-stock momentum continuing for much longer.

“Squeezing highly shorted stocks is quickly falling out of fashion,” senior strategist Ben Onatibia and analyst Giacomo Pierantoniwhich said earlier this week.

jpmorgn chart

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The red-hot housing market is leaving people of color behind. JPMorgan is pushing for new rules to fight ‘appraisal bias’ in real estate

JP Morgan
The JPMorgan Chase & Co. World headquarters are pictured on April 17, 2019 in New York City.

  • JPMorgan announced a list of new policies aimed at fighting racial biases in the housing market.
  • The bank says it wants to bring “equitable access to affordable housing” and “economic opportunity for renters and homeowners.”
  • Just last month a Black homeowner from Indianapolis got appraised $100,000 more for her home when her white friend stood in for her.
  • See more stories on Insider’s business page.

A red-hot housing market that’s seen homes go for well above their asking price, catalyzed intense bidding wars, and caused shortages of home-improvement materials could harm first-time homebuyers, especially people of color and low-income households, JPMorgan says.

The bank, the US’ largest by assets, released a slate of policy solutions this month that it says can help fight racial biases in the housing market and housing inequality that have prevented people of color from “fully participating in the housing market.”

“As the demand for affordable housing continues to outpace the supply across the country, rising housing prices make it increasingly difficult for many individuals and families to afford and sustain housing, especially housing located in opportunity connected communities with greater access to jobs and economic mobility,” the bank said in a paper.

“This has had an outsized negative impact on those most at risk of housing insecurity before the crisis-Black and Latinx households and people earning low incomes,” it continued.

Specific initiatives include policies to:

  • “Build on COVID-19 protections to effectively support homeowners,”
  • “Simplify loan servicing standards,”
  • “Leverage public funds to help homebuyers meet down payment requirements,”
  • “Expand funding to increase supply of affordable homes for purchase,”
  • “Advance reforms to increase mortgage market liquidity to improve access to affordable and sustainable mortgages that better serve people of color and low-income borrowers,”
  • “Encourage federal housing policies that advance fair housing and address discrimination,” JPMorgan said.

“There are systematic barriers in housing – and we have a role to play in addressing them,” Heather Higginbottom, president of the JPMorgan Chase Policy Center and co-head of global philanthropy, told CNN.

According to NBC News, many experts say that appraisal biases create a huge disadvantage for homeowners of color. That’s especially problematic given the US is in the biggest housing boom since the early 2000s.

In June, Insider reported that a Black homeowner in Indianapolis received extremely low appraisals for her home, and she suspected it was because of her race. She decided to have her white friend stand in for her on a third appraisal, and to her surprise, the white man was appraised for more than $100,000 more.

“I had to go through all of that just to say that I was right and that this is what’s happening,” Carlette Duffy told the Indianapolis Star. “This is real.”

Real estate agents have also told Insider that buyers with significant assets to liquidate — either another home or substantial stock holdings — are easily able to outbid other potential buyers.

“They can’t afford it because they’re not cash-rich,” one realtor said of buyers struggling to close sales. “They could probably afford the monthly payment. They have good income. They have a good nest egg. But it’s not enough.”

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Jamie Dimon says JPMorgan has stockpiled $500 billion in cash that it will look to invest as inflation picks up

Jamie Dimon, CEO of JPMorgan Chase, speaks about investing in Detroit during a panel discussion at the Kennedy School of Government at Harvard University in Cambridge, Massachusetts, U.S., April 11, 2018.
JPMorgan CEO, Jamie Dimon.

JPMorgan chief executive Jamie Dimon said on Monday the investment bank is sitting on $500 billion in cash in anticipation of higher inflation.

It has been “effectively stockpiling more and more cash” in anticipation of investing at higher rates rather than putting money into Treasuries and other investments now, he said at Morgan Stanley’s US Financials, Payments & Commercial Real Estate Conference.

“We have a lot of cash and capability and we’re going to be very patient, because I think you have a very good chance inflation will be more than transitory,” Dimon, the longest-serving CEO among the big US banks, said.

He suggested the risk of higher, more persistent inflation is growing. US inflation, or the rise in prices of goods and services, has picked up dramatically compared with last year, when the economy was in lockdown. Disruptions to the global supply chain and a burst of consumer spending have added to the increase. Higher interest rates would help ward off a more damaging pickup in inflation.

“If you look at our balance sheet, we have $500 billion in cash, we’ve actually been effectively stockpiling more and more cash waiting for opportunities to invest at higher rates,” he said. “I do expect to see higher rates and more inflation, and we’re prepared for that.”

While several Fed officials have been resolute in their view that the rise in inflation will ultimately prove transitory, other influential leaders have warned of the consequences of rising prices.

In a 1980 shareholder letter, Warren Buffett described high inflation as a “tax on capital” that dissuades corporate investment. The billionaire investor said the rise in general price levels can hurt more than income tax, and rising costs force companies to spend cash just to maintain their business – regardless of whether they’re generating profits.

JPMorgan, the largest US bank by assets, expects $52.5 billion in net-interest income in 2021, down from its previous expectation of $55 billion, partly due to a decline in credit card balances.

Separately, at Monday’s conference, Dimon said he planned to hold his position at JPMorgan for at least the next two to three years. Without giving an exact time frame, he said: “I intend to stay, which is sanctioned by the board, for a significant amount of time.”

Read More: Goldman Sachs says buy these 37 stocks that will offer strong returns with minimal risk through year-end as growth names regain leadership

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