As artificial intelligence (AI) becomes widespread around the world, will it bring inflation or deflation? Claudia Jury and Scott Hamilton, JPMorgan's new co-heads of global sales and research, believe the answer is both-inflation first, deflation later.
In their first interview since taking office, Jury and Hamilton said investors have flocked to commodities this year, betting that the infrastructure needed for artificial intelligence technology will increase demand for energy and equipment. As of Tuesday, the Bloomberg Spot Commodity Index was up nearly 8% this year.
Jury saidsharpinpinball:"Due to infrastructure and everything that the future needs to rely on, such as electricity, central processing units, power grids, etc., the gradual development of artificial intelligence will trigger inflation."
As companies use artificial intelligence to improve efficiency, deflation will emerge.
Investors have been reassessing the Fed's interest rate trajectory as indicators suggest the pace of interest rate cuts will slow. Last month, JPMorgan CEO Jamie Dimon emphasized his uncertainty about the interest rate outlook in his annual letter to shareholders, saying that JPMorgan was prepared to respond to an increase in interest rates to 2%-8% or even higher.
For investors,"the main focus right now is the Federal Reserve," Hamilton said. But "the current larger positions are less in interest rates and more in commodities and stocks."
new competitors
The growing role of non-bank institutions in business areas previously dominated by investment banks has also attracted attention. Jury said expanding private credit is one of JPMorgan's strategic priorities.
On the other hand, non-bank institutions such as Citadel Securities LLC and Jane Street are challenging the bond trading business of established institutions. For example, Citadel Securities started doing investment-grade corporate bonds last year, and the number of institutional clients using its fixed-income services has increased by more than 15%.
Some bank executives have warned of the shift, blaming regulation and urging industry regulators to intervene before risks accumulate beyond monitoring.
However, Hamilton said the fiercer competition also created opportunities. he saidsharpinpinball:"Some other banks have withdrawn." "It creates some wallets for everyone."