JP Morgan CEO Offers Warnings to Commander-In-Chief

The Intertubes are buzzing about the latest shareholder letter from JPMorgan Chase CEO Jamie Dimon. Without calling out Donald Trump by name, the letter outlines several key criticisms of the president's most newsworthy policies -- including a prescient warning about how war affects the nation's economy.

Plenty of business leaders have offered their own critiques of Trump, but the JPMorgan shareholder letter stands out because Dimon is not just any top exec. His name was floated for Treasury Secretary shortly after Election Day, and he was included in Trump's much-publicized Strategy and Policy Forum: a high-profile gathering of leading executives designed to establish Trump's A-list business cred in the earliest days of the new administration.

Dimon vs. Trump: Round 1

Pundits who are shocked by the content of the new Dimon shareholder letter should go back and recall some recent history.

Dimon's 2016 shareholder letter also included several not-so-veiled jabs at leadership styles that critics would say describe Trump.

Here's the headline from Quartz, almost exactly one year ago, on April 7, 2016: "JPMorgan Chase’s Jamie Dimon delivers an epic takedown of Donald Trump without even naming him."

Quartz writer Jake Flanagin zeroed-in on a section about leadership that closes out the letter, and he picked out a Jamie Dimon laundry list of "what doesn't work:"

“Treating every decision like it is binary — my way or your way.”

“Drawing straw men or creating scapegoats.”

“Denigrating a whole class of people or society.”

“Equating perception with reality.”

“Treating someone’s comments as if they were complaints.”

Sound familiar?

Flanigan also sliced out Dimon's take on what works:

“Collaborating and compromising.”

“Listening carefully to each other.”

“Constantly, openly, and thoroughly reviewing institutions, programs, and policies. Analyze what is working and what is not working, and then figure out — together — how we can make it better.”

Dimon vs. Trump: Round 2

To be clear, the bulk of the 2017 shareholder letter lays out a position on regulatory issues and government relations to be expected from a global financial institution.

However, Dimon raised more than a few eyebrows with several relatively brief passages that seem aimed squarely at the Trump target.

Fortune magazine's Jen Wieczner, for example, highlighted at least five hot-button issues Dimon pushed: immigration, the environment and climate change, national defense, and trade relations with Mexico and China.

The national defense issue is especially newsworthy considering the recent U.S. missile strike on a Syrian air base.

The passage on national defense comes up in a section of the letter in which Dimon discusses several "non-economic" factors that could account for slow growth, wage stagnation and the shrinkage of economic opportunity. Here it is in full:

"Over the last 16 years, we have spent trillions of dollars on wars when we could have been investing that money productively. (I’m not saying that money didn’t need to be spent; but every dollar spent on battle is a dollar that can’t be put to use elsewhere.)"

The Trump administration would like to position the Syria operation as a decisive reaction to the use of chemical weapons on civilians by the Syrian government, but questions about the missile strike are already dominating the media narrative.

That's partly because the U.S. reportedly tipped off Russia and/or Syria long before the missiles were launched, a forewarning that minimized loss of life -- and equipment -- at the air base. The base reportedly went back into action quickly, and as of this writing at least one additional air attack has struck the same site where chemical weapons were deployed.

As per Dimon's letter, attention is also quickly focusing on the cost of the operation.

MarketWatch, for example, reports that the replacement cost of the 59 Tomahawk missiles deployed against Syria adds up to roughly $60 million.

Media attention is also beginning to focus on the potential benefit to Trump's personal finances. Reportedly the president owns stock in Raytheon, the manufacturer of those missiles. Raytheon's stock jumped after the missile launch.

Dimon's criticism of defense spending is also especially relevant in the context of Trump's proposed federal budget, which would greatly boost defense spending while cutting other programs.

More jabs at Trump

Dimon also appeared to target Trump with three brief but pointed passages on immigration.

One occurs near the beginning of the letter. Dimon begins a section on geopolitical risks by promising that "I’m not going to write about immigration in this letter --," but he concludes the very same sentence with this observation:

"We have always supported proper immigration – it is a vital part of the strength of America, and, properly done, it enhances the economy and the vitality of the country."

The second reference occurs later in that section, when Dimon links economic globalization and immigration while defending NAFTA:

"Mexico is a long-standing peaceful neighbor, and it is wholly in our country’s interest that Mexico be a prosperous nation. This actually reduces immigration issues."

Dimon brings up a third reference to immigration in the same "non-economic" category as national defense:

"It is alarming that approximately 40 percent (this is an astounding 300,000 students each year) of those who receive advanced degrees in science, technology, engineering and math at American universities are foreign nationals with no legal way of staying here even when many would choose to do so. We are forcing great talent overseas by not allowing these young people to build their dreams here."

Jobs, jobs and more jobs...

Another area of focus in the Dimon letter is workforce development. In that regard he presents a powerful counterpoint to Trump's focus on bringing back traditional jobs in coal and other fossil industry sectors, including pipeline construction.

As Dimon described, JPMorgan is leading by example in this area, with more than $325 million in "demand-driven" workforce initiatives globally.

Broadly described, coal jobs could fit into this initiative:

"Our programs build stronger labor markets that create economic opportunity, focusing on middle-skill jobs – positions that require a high school education, and often specialized training or certifications, but not a college degree."

However, the devil is in the details. JPMorgan sees workforce demand in other areas that "offer good wages and the chance to move up the economic ladder:"

"...surgical technologists, diesel mechanics, help desk technicians and more ... Our goal is to increase the number of workers who have access to career path-ways, whether they are adults looking to develop new skills or younger workers starting to prepare for careers during high school and ending with postsecondary degrees or credentials aligned with good-paying, high-demand jobs.

Workforce development in the U.S. is strongly related to another "non-economic" factor Dimon said inhibits growth: the criminal justice system:

"Felony convictions for even minor offenses have led, in part, to 20 million American citizens having a criminal record – and this means they often have a hard time getting a job. (There are six times more felons in the United States than in Canada.)"

To be clear, Dimon did not examine the racial aspect of felony convictions for minor offenses. However, in a lengthy passage earlier in the letter, he connects the dots between education and opportunity with a reference to "inner city schools" that presumably refers to ethnic and racial minority youth, who are vulnerable to profiling and sentencing disparity:

"Whether they graduate from high school, vocational or training school or go on to college, our students can and should be adequately prepared for good, decent-paying jobs...Career and technical education specifically can give young people the skills they need for decent-paying roles in hundreds of fields, including aviation, robotics, medical science, welding, accounting and coding – all jobs that are in demand today."

Once again, coal jobs fail to make the cut.

Image (screenshot): JPMorgan Chase annual shareholder letter