So I think that means we're going to get going. My name is Dick Manuel. I'm an equity research analyst at Columbia Threadneedle, and I am pleased to be joined on the stage by Al Moffitt, Global Treasurer of JPMorgan, an 18-year veteran at JP, 6+ years at Goldman, and went to college locally just across the river in Cambridge. So welcome back, and welcome to your first BofA, and thank you for joining us. Yeah, so thank you. Yeah, so thanks, Dick, for having me here, inviting me to the conference. Yeah, and maybe I can fill in the rest, as you said. I've been at JPMorgan 18 years, Treasurer for the last two, obviously an exciting two years to be Treasurer at JPMorgan Chase, and I've been around the Treasury space for about 11 years, started my career, as you said, at Goldman, but was initially on the sort of fixed income research side, supporting the swaps trading desk. I moved over to trading really where I grew up in the business, trading interest rate and currency options. Did seven years in Tokyo, three in London, and back in New York for the last 15. Great. Well, for the last two years, Jeremy was up here, and I generally asked him what JPMorgan's top challenges and opportunities were. So I'm going to give you that same question, and not just the short term, but medium and longer term challenges. Yeah, sure. So obviously those are some pretty big shoes to fill, but obviously my job here as Treasurer is to just help the company navigate through change, through choppy waters. So for me and for my vantage point, the sort of things that we have, the challenges we have looking at the company are probably three main areas. So one is the macro environment. The second is just around regulation, which I'm sure we'll probably be spending a fair bit of time on today. And the third is just competition, right? So on the macro side, a lot of events this week, but where does rates and credit go from here? On the regulation side, there's definitely a lot to talk about, so stuff that's outstanding as well as potentially newer areas to kind of come in, but those regulators certainly have their handful. And then on the competitive side, it's just a fiercely competitive business, as everybody knows, competing against banks, non-banks, fighting for innovation, staying ahead of the curve, and fighting complacency. In terms of areas where for me, where I've been spending time sort of along these challenges, 2023 brought lots of events, lots of new data, lots of observations. And with every event like that, it's important and critical for us to think about what information can we take away from that? How does JPMorgan Chase manage our balance sheet in the most efficient and most optimal and smart way? So taking those lessons back home. And then obviously in this seat with all the looming regulation and potential for more or just all those changing dynamics, which is critical for us and to the industry, into the economy as a whole. I spend a lot of my time just on those kind of regulatory matters, both internally and externally. That's a perfect segue into talking about the events of this week with the election and everything. You guys probably have worked through an array of possibilities before we got the actual result, but what do you think the impact will be on the regulatory landscape, including capital and liquidity from? Yeah, it's a great question. Obviously, the election is de facto one business day old, and many votes are still being counted. So I think on some front, it's still a bit early to tell. Obviously, lots of speculation out there, but it's really hard to be precise about what's really to come. I think in terms of our stance on the different administrations, including a lot of the changeover that we expect to come in DC at JPMorgan Chase, we've worked with all the different administrations. It's really critical that we do so and do so in a constructive way. And that's the administrations, the government sections, as well as all the agencies, banking and securities regulators. So we're always prepared for that. In terms of what it means, like I said, in terms of the regulation, it's hard to be precise about what specific changes will come. For us, the most important thing is that any change to the regulation or whatever's outstanding is done so in a fair and a transparent way. And certainly given the effects and impact that it really has on cost and availability of credit, that good, thoughtful analysis on the cost-benefit side is really seriously contemplated. So let's drill down on Basel III Endgame. I mean, obviously, that's been an area of focus for all of us and you over the last few years. You guys have been pretty vocal when the initial NPR came out last year. We've heard Vice Chair Barr talking about potential revisions. Do you think that the revisions as described, obviously we don't have a final, but as described, do they go far enough? Or any comments on how you feel about that? Yeah, sure. So at a high level, we obviously had Vice Chair Barr's speech about two months ago. He clearly touched on a number of areas, previewed the areas of the Endgame proposal and a little bit on GSIB that they're looking to sharpen the pencil on in terms of the re-proposal. But that said, normally a speech like that would be accompanied or as a sign of an imminent release that we didn't get. So it's hard to comment specifically on the re-proposal when it's not yet in public domain. So clearly we'll have to see that. As far as what he said, it sounds promising, but the devil's in the details with that. Fair enough. And I don't know if you can comment, but do you think that the election outcome might play into that or how it might play into that? Yeah, it's really, really hard to say. I mean, again, ballots are still being counted. And of course, with changes in administration, there'll be some changeover at some of the tops of these agencies. But again, what was meant to have come out or possibly come out was really about this re-proposal that clearly didn't happen. So that sort of stalemate, as reported by the media, sort of could keep things a bit slower, but it's hard to see how that. Yeah, so that timing is still undetermined. And what happens after that if we get it? What's the process once it is re-proposed? And have you heard anything on timing? The reality is that we don't hear much different than you guys hear. So in terms of the timing, we really don't know. Obviously, there's a bit of that stalemate again in the press. So I guess the question is whether maybe the election starts to put things in motion. But in reality, when you take a step back and see what was potentially there, based on what Chair Powell and Vice Chair Barr talked about, this package for the re-proposal, we should probably see something that's hundreds of pages of rule text. It probably includes the QIS and the data study, which is something that was missing from the original proposal and critical for us and the public at large to be able to understand how they're thinking about it, what might be some of the economic effects, and ultimately cost and availability of credit, which is really, really what matters to the real economy, so I think with a release like that, that'll trigger us and the rest of the industry to initiate a lot of analysis, and the release would start the clock on the regulation, on the actual comment period. The comment period, and then just to give you a sense of that whole timeframe and how that operates, once the clock starts, whether it's 60 or 90 days for the industry and the public at large to put together the comment letters, those all get sent in. Obviously, round one were 300, 400 letters on the receiving end. That's a lot to process. So who knows about the scale of the number of letters that would come in this time around and round two. And they're going to need to digest it and understand it. And then I think from that point, kind of going, it's a three-way agreement between the three different agencies to agree a final set of principles, a final set of calibration. And even when that occurs, the staff has to write the final text and agree to the final text as well. So probably as writing 1,000+ pages of final text, all that's going to take some time. So sit here in November and ask the question about how and where will this really play out. So is it still possible to see a final set of rules in 2025? Yeah, it's possible. But realistically, to make that happen, we'd have to see this released sometime in the next couple of months. So what do we do in the meantime? Are you proactively working to mitigate a rule that we don't even have the specifics on? What can you do or to what degree do you do something in this interim period? Yeah, no, that's a great question. We've done some. I mean, I think the short answer is yes and no, so on the yes front, obviously we've retained a bit of earnings, and so we've built capital, and that really puts the company well positioned to deal with a range of capital outcomes, particularly at the higher end, so in that sense, our fortress balance sheet just has us ready to grapple with a wide range of outcomes, and it's important to us as a position of strength that we can do that. I think in terms of the businesses, I think obviously there's a proposal out, there's a handful of speeches, and that in and of itself isn't enough for us to say that we should radically change our business. Clearly, if we're going to do long-dated transactions and those that may involve material, wide range of outcomes on the rules, we'll think twice and try to be smart and thoughtful about how we approach that part of the business. But that said, for the day-to-day activity, we do incorporate in our business plans. We don't want our businesses thinking that the sky is falling and that we need to shut our businesses. That's not really the intent. So we do encourage our business to look at a range of scenarios. That way, again, as a company, we've got the financial resources and the excess capital at the moment that affords us great flexibility. The businesses already contemplate ranges of outcomes and thinking about competitive dynamics. So in that sense, but we're not doing any radical rebalancing of the balance sheet. Got it. And one of the great frustrations for me on this sort of general topic is the GSIB surcharge and the fact that it hasn't been recalibrated so far. And Barr has made some comments about tinkering with the GSIB surcharge. Do you have any thoughts to share on that? And would those comments, if they were to solidify, make it harder for you to manage the GSIB surcharge? Sure. So let me take a big step back. Prior to the proposal, JPMorgan Chase, we've been on the record for several years talking about structural changes to GSIB, not just the calibration. That's a separate point we'll get to. But in terms of the design, so we've been on the record that we think that it's important for the surcharge to reflect the smaller buckets as well as an averaging. We think that's great for the end users. And removing some of those cliff-like effects really should have a positive effect and put a little less pressure in the markets we've seen in some of the year-ends prior to COVID. In terms of, but one side note just on an averaging point, the proposal included daily averaging. And we understand that we're not addressing concerns by the regulators. But daily averaging is some of the components that we actually measure aren't even produced on a daily basis. So if the goal is to address the sort of window dressing concerns, then you can easily accomplish most of that through something like a quarterly or monthly type basis. So that taken together, I think, helps us manage the GSIB surcharge in terms of how the net effects to the customers. But that said, I think the other aspect of it is really just the GSIB itself has been something that's gold-plated since day one, the so-called Method 2 surcharge. And when you think about the adjacent effects of, and Vice Chair Barr didn't speak to this in the speech, but the effects can get amplified when you think about applying a much higher RWA to a relatively high existing GSIB surcharge. Right. Double punch. So let's switch off of Basel III and GSIB and talk about the CCAR process. Governor Bowman, who's awesome, recently acknowledged issues with the stress testing and with the SCB framework overall. She pointed specifically to the volatility of the results and duplication of some of the effects, which we were just talking about for a second there. But any thoughts on what might happen there or your reactions when you read what she had to say or listened to it? I don't know. Or both. Or both. Right, so yeah, so appreciate their comments on the stress testing. I think first and foremost, stress testing is a critical function for banks, right, so we do this not just in the annual CCAR type cycle, but we stress test the company and the portfolios on a quarterly, a monthly, a weekly, a daily, intraday basis or whatever concerns arise, even in the middle of the day or something happens, so stress testing is critical for a bank's risk management. It's also important for the Fed and other supervisors to do their own stress testing to understand vulnerabilities in the system and promote financial stability, so that we believe is critical. That said, we certainly share Governor Bowman's stated concerns. The volatility of the SCB is a concern. The limited transparency that we've had throughout the process is also a concern. And then on the duplicity point, that's something that's been around and is probably going to get worse unless it's addressed. So I think we often talk about thematic crossovers between things like the market shocks and the GSIB surcharge sort of capitalizing twice for two similarly thematic risks. But when you take a step back and think about the Basel III Endgame effects, just two simple examples, right? Op risk, we're already capitalized for operational risk losses under the stress capital buffer, but at the same time, we're now going to have to hold incremental capital for operational risk RWA. And the trading side, we already have the sort of global market shock and existing market risk capital. I think everybody's well aware that the FRTB is going to skyrocket the amount of trading book capital. And so in a world where that increases for the BAU RWAs in a very significant amount, some consideration should be given as an offset through the GMS. And that's really about coherence in the design of the overall stress testing framework. So hopefully, as the Fed comes together on Endgame, their approach to Endgame, end GSIB, and the stress tests are kind of done a bit in concert with each other. Having talked about the capital requirements and some of the potential changes and sort of the transition period here in between clarity, let's talk about capital. It continues to build up. Your CET1 ratio is 15.3%. Under the last CCAR, I think it's 12.3%. And you generate 72 basis points of capital - 22 for the dividend, 50 basis points a quarter, piling up in the halls. Can you talk about your plans for all this capital? And Jamie's made some provocative comments about buybacks. Yeah, I'm not sure I would characterize provocative. I think that's a very thoughtful comment. Oh, well, yes, absolutely. Thoughtful provocative comment. Yeah, sure. So I mean, my philosophy is not going to differ from Jamie and from Jeremy. Obviously, I think as a general matter, it will sound like a broken record here about our capital philosophy. So we tend to really focus on using our capital for customers and clients and organic growth of the business. And that's sort of the first order of priority. We've got a healthy, sustainable dividend, which we did increase by almost 20% over this past year. And then comes buybacks. We have done some. But I think that, as I said before, we think that by having retained a fair bit of earnings over time, that just puts the fortress balance sheet and puts the company in an excellent position of strength to grapple with a wider range of outcomes. We recognize that we're not going to run at this elevated level of capital forever. At some point, we'll look to distribute it or utilize it in various ways. We prefer to, of course, utilize it for customer activity than just simply distribute it, but at least according to the hierarchy. That's really where we are. Again, I think that Jamie often talks about capital as earnings in store. I think that just because that opportunity hasn't yet presented itself doesn't mean it's not going to show up tomorrow. I think we're ready to go. Then sort of tie back a little bit to the points about not just today and kind of the connectivity to the overall endgame framework and even back to the Vice Chair Barr speech. He did talk about having 9% higher capital for the GSIB. And that's something that we've always said that we think we're well capitalized even before these speeches. But really, at the GSIB level in aggregate, that's something like $75 billion of excess, not excess, but additional capital that's required for the eight GSIBs. And that's really something that goes back to if it's got to go up, really need to understand, which we'll see through the analysis and releases as to why that makes sense, where it makes sense. But again, we're operating in a position of strength. It's a matter of when and not if. Yeah, maybe I could sneak in there a question about dividend philosophy. If you could address that one specifically. What is the philosophy on the level of dividend? Bonus question there. Bonus question. Yeah, totally fine. Again, I think as we stated, it's a healthy, sustainable, growing dividend, right? I think that obviously what you hear Jamie say at times is that if he were the owner of the company, he would just say, "Okay, you'd want to just keep organically compounding and growing it for ourselves and not have a dividend." But we recognize that the dividend is a form of capital distribution to our shareholders. That's real money that finds its way into the economy. That's real cash flow to pensioners and folks. And that money itself actually gets recycled back into the economy. And that's an important part of our capital distribution. So when we say sustainable, our version of sustainable is something that we think is a reasonable balance that will withstand large shocks that we don't have to go. Cut it in moderate recessions, but of course, if we were facing a catastrophic issue or severely, we may have to cut it materially, but really, that's what we really mean by sustainable, and to the extent that we can grow it, and we're fortunate that earnings have grown and the franchise has grown, we're happy and proud that we've been able to increase it as much as we have. Great. Yeah. So in light of this capital conversation, how should we think about the 17% ROTCE kind of target just with capital requirements potentially going up, but at the same time, there's a lot of capital in the company now and you're nailing the ROTCE? What are your thoughts on capital requirements and their interaction with that target? Yeah, so our last two investor days, Jeremy had gotten up and showed some slides about ranges of scenarios and effects it could actually have on our returns. We religiously look at ranges of scenarios, the slides in that simulation. I think that what you find there, we look at ranges for everything from range of outcome on capital. We look at various macro factors. We look at competition and competitive dynamics and all the corresponding effects on revenue and expenses in the bottom line, so we take all that together. As a company, we're always focused on, again, growing the franchise, doing the best we can for our customers and clients and shareholders, and focus on operational efficiency. You take all that together, we think that 17% is still the right target through the cycle. That said, 17%, we've obviously out-earned that over the past couple of years. But looking forward, there are certainly a few challenges that Jeremy and Jamie have talked about. But in the grand scheme of things, 17% is a great return. And we don't get it just for free. We work hard for it. And we're proud we hit it and exceed it. So we've had this conversation collectively, the market with Jeremy about the effects of QT on bank reserves in the system and the RRP. And we're getting to this point where QT may be coming to an end. Do you have thoughts on what that could mean for liquidity in the system, system-wide deposits, the RRP itself, and back to JP? Yeah, sure. So over the period, I mean, we've had quite a journey between RRP and QE and QT. So obviously, there's a ton of liquidity put into the system. So as the Fed started the QT process, liquidity has been draining out of the systems. Deposits have been coming down. We're near, as you say, near the end of QT. Our house view is, yes, we share the view. So maybe over the coming months, RRP has come down considerably. And so therefore, I think the kind of headwinds to an overall deposit level, the system-wide is probably mainly over as it relates to JPMorgan. We've talked about this as probably about the trough in terms of deposit balances. this point forward, which is probably the more interesting point, it just then goes back to the thing that then takes over is more of the traditional flow of funds type dynamic. So the economy is humming and we've avoided the recession and we're going to see and believe that we could see a pickup in loan growth and CapEx. That's the kind of environment. Every loan creates a new deposit. So we think that going forward from here, we're going to see a pickup in deposits. And then as far as it relates to JPMorgan Chase specifically, I think that we're out there every day trying to deepen the relationships with our existing customer base. All the expansion markets we have, we keep going and trying to find new customers and expand the franchise, both domestic and abroad. This might be all open up to questions from the group here in a sec, but it might be a good place to ask about Vice Chair Barr's comments that he made about the liquidity regime and folding in deposit outflows held-to-maturity, the discount window. Do you have any thoughts there on how his thoughts on the framework might impact the way you as the treasurer navigates? Sure. Yeah. So no, it's an excellent question. I'm not sure if you actually want me to leave time for questions because I can speak all day on this stuff. This could be a long conversation. But let me just try to take a couple of those things. There's a lot in there. So if I forget any, just prompt me and I'll make sure I get back to it. So deposit outflows, clearly in 2023, we saw deposit outflows kind of at a number of banks here in the U.S. and abroad. And like I said earlier, there's plenty of lessons, plenty of data that's in there. And I think that there's probably pockets of the deposit framework in the LCR and the internal stress test that do warrant a bit of a higher segmentation, a higher degree of granularity. And that's to better identify areas of potential vulnerability. But at the same time, once you open the books on regulation and adaptation, it doesn't mean it has to go up. So even if what we wouldn't want to see is a knee-jerk reaction, that simply just makes the cost of everything a lot higher. Surely there's some other areas that may warrant a dial back. But that's a very public process. And so we'll wait to see that unfold. Then on HTM, I think we've heard the speech from Vice Chair Barr talk about this. And really what the dialogue for HTM in this context is really about liquid asset monetization, right? Cash, Treasuries, sorry, Treasuries and Agencies and other highly illiquid assets and our ability to turn that to cash when it's needed. And since we're talking about HTM as opposed to AFS, the only viable path for that is repo. I think that as a reminder, the portion of our HQLA buffer that is all assets in our HQLA buffer, all securities assets are on a mark-to-market basis, regardless of accounting designation, whether it's AFS or HTM, and all of the assets in our HQLA buffers are already tested for monetization, so meaning if there's an asset that we have that seems like it's liquid, but for some reason we can't operationalize the monetization or there's not insufficient market capacity to monetize that asset, we just don't count it, and so from our standpoint, even for our HTM population, we have the operational capabilities and the market capacity to support that monetization, so as they come out, we'll be curious to see their take on it, but again, that'll be a very public sort of exchange. I think the next thing you asked me about was the discount window. And so JPMorgan Chase, we've been pretty vocal about things like on the discount window. It's a critical function. It's around as long as the Federal Reserve, and I think it's an integral part of what central banks do. As far as on the actual discount window itself, the Fed's already put out a request for information. They're keen to find ways of making the discount window better. And that's both from an operational capacity perspective and sort of other functionality, whether that's collateral, whether it's ease of borrowing. So especially in a world we go to FedNow or 24/7 payments down the road. So that's in real-time settlements. So we welcome any or all enhancements to the discount window. For us, it's critical that we make sure everything works. So for us, we test on a quarterly basis. We'll test borrowing from the discount window, borrowing from the SRF. We move collateral in, out, across different facilities, including the Federal Home Loan Banks, and because again, if you don't know how to get the collateral to the right place when it's needed at the moment when it's needed, it's useless. I think the last thing that was out there was just really a question about these new metrics, so in January, Acting Comptroller Hsu had talked about this sort of short-term test and Vice Chair Barr talked about that again recently, so there's some intellectual merits of this sort of five-day uninsured deposit liquidity test, but if the intellectual part of that is really a question about can the banks access the discount window, hey, there's no reason why you can't make that happen through supervision and guidance, and that's really what matters, and all this should be really part of the contingency planning. That's great. All right. So we'll open it up for questions. And Julian. No. Oh, yeah, the mic. Yeah. Thank you. Yeah. Thank you. The question is about how you're positioning the treasury portfolio for the rates outlook. I mean, in the pandemic, Jamie was incredibly vocal about staying liquid. I remember him saying he wouldn't touch 1% bond yields with a 10-foot pole and that was an incredibly strong position. And you had far more net interest income growth than rivals. What about now? Because rate expectations have been extraordinarily volatile, but still kind of rates expected to cut. So how are you kind of immunizing against rate cuts? Yep. Sure. No, it's an excellent question. I mean, Jeremy had talked about this, our most recent earnings. He talked about that in our upcoming disclosure, which is now out in public in the 10-Q, that we're a little less asset sensitive and our up 100 scenario has gone down to $2.1 billion. So that effect is part passive and part active, and the active part is putting on a little bit more duration, and as you say, the effect of going longer in duration is something that really just protects NII volatility in a range of scenarios, and rates, maybe the short-end rates are poised to cut and the number of cuts have been kind of moving around a fair bit. I think in terms of as we think about it, we take a step back at the portfolio. That NII, the concept of continuing to extend duration is something that is reducing NII volatility across a range. I think for us at this moment, across that range, I think we feel very good and comfortable about how much of that protection we've got locked in. Great. Thank you. Hey, Ryan Kenny with Morgan Stanley. So we talked about quantitative tightening likely to end soon. How do you think about the impact that has on deposit growth across the different businesses? I mean, really what I said before, I think kind of holds in the sense that with those headwinds on deposits coming out, now it's just going to be the economy kind of starting to resume as normal. So I think we'll see. I think there's still a bit of normalization to occur or a bit of maybe rebalancing between money on the retail side has gone between CDs over to CDs. So I think there'll be a little bit of swing kind of back and forth. But I think in the grand scheme of things across all the business lines, it'll be up from here. But it's not going to be up at a pace like we saw during QE. Yes. Can you introduce yourself too? So your SCB has gone from what, 4% to 2.9% to 3.3%. That's some volatility in your SCB. That's like not knowing your cost of goods sold after you made the sale. So I understand your desire to maybe have the CCAR changed a little bit. What's one path, any path that might cause that to change? And what sort of impact do you think that would have on your required capital? Is it 10 basis points, 50, 100, 200 basis points? If you got rid of some of that duplication you mentioned, whether it's Op risk or market shocks. Yeah. I'll do my best to unpack the six pieces in there and not take too much of the bait. So I think it's a couple of things. What I'd say is on one hand, to reduce the volatility, you could just do something like average. And yes, that is a solution. And there's slower change because obviously if you were just doing a blind two-year average, three-year average, any movement would just have a slower effect. Yeah, that's a solution. Whether that's the best solution or not, it's neither here nor there. And smart minds will disagree. I think in terms of the true structural sort of and then I think at the end of your question was a bit of if they fix a bunch of things, how much can it move and how much can it reduce? That's going to be up to the Fed, right? We make our case all the time that we should remove these duplications. We do think that there's a meaningful amount of duplication in there. I'm not going to take a swag at exactly what that would mean for us or some of the other banks, but that's really, I think, how much gets acknowledged and how much gets addressed. That said, there's a sort of sweet spot in the middle, and this kind of goes back to a little bit of the transparency point that when those sort of limited transparency. I mean, I think the Fed puts out a 100-page document that describes a bit about their models, how they approach it, and when you think about the Fed running the stress test versus the banks running the stress test, right? So we've got models that are highly in tune with all of the stuff that goes on in the company and a very, very granular level of information. And therefore they're high-performing and highly tailored and highly bespoke and understand the company. The Fed models tend to be a bit more macro and kind of run against all of the CCAR banks. And so they're really modeling the system. There's some firm-specific things they have in there. But I think this is really where the limited transparency then kind of comes in. So I think some of the question there is, what's the path of the Fed models? Do they do something that's a bit more granular? So for example, they've got expenses are linked to as a function of the balance sheet. So when QE was occurring and they say that expenses in their regression models are some percentage of assets or operational risk losses or a percentage of assets. And they lock in, you guys do plenty of regressions over here. So you get those regression coefficients. And then what happens? The balance sheet grows because of continued QE. Well, guess what? Our Op risk grew or expenses grew and those were SCB headwinds. So I think there's some aspects in the Fed models that would be great to kind of open up. We've seen volatility in things like PPNR and the disclosures that are out there really just on a nine-quarter cumulative basis. So there's elements that we can kind of get. And I think that we're pretty good at guessing the broad direction. We think the SCB is going up, but the level of precision is not there. So I think if they were able to fine-tune a bit of their models, a bit higher transparency, a bit sharpening on some of the firm-specific stuff and not as blanket assumptions like linkage to total assets, that could help make the outcomes a bit more rational, a little less volatile, and a bit more predictable. That would just result in a little less buffers and a little.