Not much seems to be making a dent in the current market optimism. The latest warnings from JPMorgan's Jamie Dimon on geopolitical risks and tariffs have become par for the course.

While he hasn't quite achieved the stature of legendary investor Warren Buffett, as the head of America's biggest bank people usually sit up and listen when Dimon makes predictions.

To be sure, he's not always right. He foresaw an economic collapse when the Federal Reserve raised interest rates after the Covid-19 pandemic, and he has been saying for years that the collapse of Bitcoin is imminent.

His comments on Monday weren't nearly as controversial. He said stocks could sell off, credit could become scarcer, geopolitical risks are high, the tariff rates that President Donald Trump has imposed are "extreme," and there's a bigger chance of stagflation -- the combination of weak growth and quickly rising prices -- than people are counting on at the minute.

That's sensible enough. But after months of peaks and troughs from tariff news, investors are basking in the relative calm. Stocks were even able to shrug off Moody's downgrade of U.S. government bonds to finish in the black yesterday.

Also Dimon isn't worried about JPMorgan. The company stuck to its guidance at its investor day Monday and sees strong growth ahead, in spite of the risks that Dimon himself flagged.

There will come a time when the warnings may need to be taken more seriously. Stagflation is miserable and tough to overcome -- though if Home Depot's results on Tuesday are anything to go by, things aren't bad yet. The home improvement chain maintained guidance for the year even as it missed expectations for the quarter. Earnings from Target and TJX later in the week will add to the picture.

Stagflation is also a tricky situation for the Fed. As interest-rate setters pointed out Monday, it creates a dilemma that could force the central bank to choose -- at least in the short term -- between the two mandates of keeping inflation low and maximizing employment.

One thing Dimon shares with Buffett is that he's going to step down in the not-too-distant future. Investors may not have their sage advice much longer, even if they choose to ignore it now.

-- Brian Swint

***

Fed Officials Say Downgrade Complicates Inflation Outlook

Moody's downgrade of the U.S. credit rating could have implications for prices that Federal Reserve policymakers will need to monitor, according to Atlanta Fed President Raphael Bostic. Concern about the U.S.'s financial strength could result in investors demanding higher yields to hold Treasury debt.

   -- Moody's expects the federal deficit to reach nearly 9% of gross domestic 
      product this year, from 6.4% in 2024. The downgrade raises questions 
      about long-term U.S. spending and debt. That makes anything financed by 
      the public and private sectors more expensive, said RSM US chief 
      economist Joe Brusuelas. 
 
   -- The 10-year Treasury note yield is near 4.5%, about where it was a year 
      ago. But if yields were to rise materially again, it could influence the 
      Fed's thinking on interest rates. Bostic, who currently isn't a Fed 
      voting member, told CNBC he is leaning toward one rate cut in 2025. 
 
   -- Based on April inflation data, the average effective tariff rate is now 
      16%, up from 3% in February, according to Sam Tombs of Pantheon 
      Macroeconomics. The CME FedWatch Tool currently shows expectations for 
      two quarter-point cuts this fall, down from the three cuts expected 
      earlier this year. 
 
   -- Fed Gov. Philip Jefferson and Bostic spoke Monday of continuing 
      uncertainty facing the U.S. economy. It is too early to tell how tariffs 
      and other White House policies, as well as the administration's proposed 
      tax changes, will affect the Fed's dual mandate, Bostic noted. 

What's Next: The Fed next meets June 17-18 and is widely expected to hold interest rates steady for a fourth straight meeting. Policymakers will also update their economic projections, offering fresh guidance on the likely path of inflation, employment, and interest rates.

-- Nicole Goodkind

***

Nvidia's CEO Says Ban of Its Chips to China Costs $15 Billion

Nvidia CEO Jensen Huang has put a number on the revenue impact of the U.S. government's latest move to limit chip exports to China: $15 billion. He called the ban deeply painful, and said the restrictions are shortsighted and ultimately will only help China.

   -- Last month, the Trump administration effectively banned sending Nvidia's 
      H20 chips to China by tightening chip export licensing requirements. At 
      the time, Nvidia said it expected to take a $5.5 billion charge related 
      to inventory and purchase commitments from the new restrictions for its 
      fiscal first quarter. 
 
   -- Critics have said offering Nvidia's AI chips to China -- even one or two 
      generations old -- can help companies in China catch up to the U.S. in AI 
      technology. Huang disagrees, making his comments in an interview with 
      Stratechery's Ben Thompson. 
 
   -- The restrictions open the market in China for increased usage of Huawei's 
      AI chips, Huang said in the interview. If more companies use Huawei's 
      chips and the Chinese company can refine its software, Nvidia's current 
      CUDA software advantage could erode. 
 
   -- His comments coincide with Nvidia's announcement at a trade show in 
      Taiwan that it is taking a significant step toward opening its platform 
      and allowing customers to bring their own CPU or AI chips for use on 
      equipment in Nvidia server racks. 

What's Next: The open system means large cloud providers, which were locked out of Nvidia's system when using their own custom chips, can now mix their custom chips with Nvidia's sought-after technology. For Nvidia, it means the potential to fill more data centers with its own server platform.

-- Tae Kim

***

At JPMorgan, CEO Dimon's Successor Still a Mystery

JPMorgan Chase CEO Jamie Dimon will mark 20 years in that job next year, and it's still not clear when he will step down from the helm except for his hints at Monday's investor meeting that "nothing's changed" from last year and "it's up to the board." Dimon turns 70 next year.

   -- Wall Street has been awaiting clarity on his successor since he said last 
      year it wouldn't take another five years. Marianne Lake, JPMorgan's 
      consumer banking head, is seen as the top contender. She appeared at 
      investor day and said they had anticipated an economic soft landing 
      "until recently." 
 
   -- Dimon's views are closely followed on Wall Street, where he serves as an 
      elder statesman. He cautioned current geopolitical risk is "very, very 
      high," adding that the Trump administration's reduced tariff rates were 
      still "pretty extreme." In his view, the chance of stagflation is "a 
      little bit higher" than others think. 
 
   -- JPMorgan reaffirmed its full-year net interest income forecast of about 
      $94.5 billion. Management said the company is well positioned to take 
      advantage of a possibly improved regulatory environment and can navigate 
      the current uncertainty that has weighed on the economy. 
 
   -- CFO Jeremy Barnum called JPMorgan one of the early movers in artificial 
      intelligence, originally using it to prevent fraud, and now eyeing other 
      uses for it, such as customer service functions. "We can't afford to fall 
      behind," he said. 

What's Next: Dimon also reiterated his still-lukewarm feelings about crypto. While he'd be open to JPMorgan offering Bitcoin to clients who want to buy it, he doesn't want the bank to custody it, and personally prefers to keep his distance.

-- Mackenzie Tatananni and Janet H. Cho

***

Regeneron Wants This DNA Testing Firm. The Question Is Why?

Regeneron Pharmaceuticals entered into a head-scratching $256 million deal for most of the bankrupt consumer genetic-testing business known as 23andMe. What Regeneron seems to be aiming at is using 23andMe's data for drug development. That's what 23andMe planned to do itself as it went public in 2021.

   -- 23andMe became famous for the home DNA tests consumers used to trace 
      their ancestry. Regeneron plans to keep selling DNA tests to consumers. 
      It's also buying the 23andMe "Biobank," a database of genetic information 
      from millions of customers who agreed to allow their genetic data to be 
      used for research. 
 
   -- Once valued at more than $5 billion, 23andMe's business struggled. In 
      bankruptcy filings this year, 23andMe said genetic-testing revenue and 
      demand had declined, while competition had increased. After its 
      bankruptcy in March, consumers raced to have their genetic information 
      deleted from its database and genetic samples destroyed. 
 
   -- Regeneron's drug Eylea for wet age-related macular degeneration faces 
      stiff competition, particularly from a new Amgen drug called Pavblu. 
      Sales of a new dose of Eylea are lagging expectations, and analysts are 
      watching as Regeneron defines its next chapter as Eylea and Dupixent near 
      patent expiration. 
 
   -- The company's chief scientific officer, George Yancopoulos, said the 
      23andMe deal can help build upon its mission to help those interested in 
      learning about their own DNA and how to improve their personal health, 
      "while furthering Regeneron's efforts to use large-scale genetics 
      research to improve the way society treats and prevents illness overall." 

What's Next: The bankruptcy court on June 17 is scheduled to review and potentially approve the transaction. Regeneron has assured 23andMe customers that it would comply with its consumer-privacy policies and protect its data with high standards for data privacy, security, and ethical oversight.

-- Josh Nathan-Kazis and Janet H. Cho

***

UnitedHealth Insiders Buy Stock After Slump

The raft of bad news weighing on UnitedHealth Group stock appeared to be a buying opportunity for a bunch of its directors. Five company insiders, including new CEO Stephen Hemsley, have bought stock, showing the embattled health insurer's execs are willing to "put their money where their mouth is," according to one analyst.

   -- Hemsley purchased about $25 million of UnitedHealth stock on Friday -- 
      86,700 shares at an average price of $288.57 -- according to a Form 4 
      filing with the Securities and Exchange Commission late Friday. CFO John 
      Rex and three directors also bought shares. 
 
   -- UnitedHealth stock rose 8% Monday, beating every other stock in both the 
      S&P 500 and the Dow Jones Industrial Average. It's still down 37% in 
      2025, making it the Dow's worst performer for the year. 
 
   -- UnitedHealth shares fell sharply last week after the company surprised 
      Wall Street by pulling financial guidance for 2025 and bringing Hemsley 
      back to the CEO role to replace Andrew Witty, who stepped down for 
      "personal reasons." Hemsley had been CEO from 2006 to 2017. 
 
   -- Shares were also pressured by a report from The Wall Street Journal 
      saying that the Justice Department is investigating the company for 
      possible criminal Medicare fraud. UnitedHealth said in a statement that 
      it hadn't been notified by the Justice Department of the criminal 
      investigation and that it stands "by the integrity of [its] Medicare 
      Advantage program." 

What's Next: The insider buys could be good news for the beaten-down stock, per Zacks Investment Research strategist Andrew Rocco. "Heavy insider buying in a short period is one of the best 'tells' savvy investors can observe for a prospective stock. Last week, UNH insiders put their money where their mouth is," he said.

-- Andrew Bary

***

-- Newsletter edited by Liz Moyer, Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 20, 2025 06:48 ET (10:48 GMT)

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