JPMorgan's $9 billion spend could be contagious
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JPMorgan Chase's earnings results included a miss on investment banking revenue and a hit to net income. But CEO Jamie Dimon is still increasing the bank's planned expense growth for 2026 by about $9 billion.
Why it matters: If JPMorgan is spending more, other banks may follow suit, which could fundamentally change the base case for financials this year.
What they're saying: Banks could use JPMorgan's expense increase, "frankly, as an excuse. Because if JPMorgan is doing it, what are we missing? Should we be doing the same," Herman Chan, analyst at Bloomberg Intelligence, told Axios.
- JPMorgan signaled it would guide to 9% expense growth for 2026 at a recent conference, totaling $105 billion.
Threat level: If other banks follow suit and widen their wallets for this year, that could "dent sentiment" across the financial sector, Chan added.
- Wall Street has been very bullish on the financial sector as an investment opportunity given the expectation of looser regulation from the Trump administration, an expected pick-up in dealmaking and an economy that continues to hold up.
- Upping spending plans too much could change the value calculation on the banks for their investors.
Zoom in: There's spending that makes you money and spending that you just have to do to operate the business. Investors prefer the former.
- JPMorgan mentioned inflation and health care costs as part of the guide higher.
- But they also signaled that their spending on AI innovation is driving expenses, which could be viewed as a reasonable place to invest.
Thought bubble: I'd love to ask Jamie about the return on investment in the bank's $3 billion building in Midtown that I get a great view of every time I fly in and out of the city.
The bottom line: As goes Jamie, so goes the market.
- We'll be on the Bank of America earnings call Wednesday morning to hear about any expected changes to their expenses.
