JP Morgan President: "Regulatory Easing Under Trump Administration... M&A Activity to Increase"

Daniel Pinto, President of JP Morgan Chase, the second-in-command at the largest bank in the United States, predicted that with the launch of Donald Trump's next administration and the continuation of deregulation, a wave of mergers and acquisitions (M&A) will sweep across all industries. However, he cautioned about the possibility of inflation surging again due to the so-called 'Trump tariffs.'

In an interview with Nihon Keizai Shimbun released on the 15th, Pinto said, "M&A will become active in all industries." He attributed the approximately 20% contraction in the global M&A volume, which was around $4 trillion annually in 2021, to the Federal Reserve's (Fed) monetary tightening stance and the regulatory policies of the Joe Biden administration. He pointed out that many M&A deals were put on hold due to antitrust lawsuits and strict reviews by the Federal Trade Commission (FTC), the competition authority.

Regarded as the successor to "Wall Street Emperor" Jamie Dimon, Pinto noted, "It took a long time for authorities to approve deals, and many cases led to lawsuits, so corporate executives lacked confidence in completing M&A." He also evaluated the banking industry's regulations as "excessive in many areas." He expressed optimism that "under the new (Trump) administration, these regulations are likely to be adjusted," expecting the M&A market to become more active in the future.

Regarding the U.S. economy, he assessed a high possibility of a soft landing. However, the key issues are the tariffs and tax cut promises made by Trump. Pinto closely monitored the impact of these policies on inflation and the Fed's monetary policy. He expressed concern that tariff-induced price shocks could lead to higher inflation than people expect. He said he is most wary of a scenario where Trump's economic stimulus leads to a resurgence of high inflation, adding, "In that case, the Fed might apply the brakes with high interest rates, potentially causing a mild economic downturn."

Regarding the stock market, which has continued to hit record highs this year, he said he is "somewhat optimistic" but urged caution. He pointed out that the price-to-earnings ratio (PER) of the S&P 500 index is 22 to 23 times, far exceeding the 20-year average. Additionally, he forecasted that U.S. Treasury yields, based on the 10-year maturity, will remain in the 4 to 5% range, stating, "The era of low interest rates will not return."