By Scott Hallermann.

On day 1 of bank earnings results, JPM CEO Jamie Dimon framed a major concern of mine as relates to 2023 industry risks. In response to questions regarding the bank’s Net Interest Income outlook which showed a -8.6% step down from the 4Q22 run rate, Dimon elaborated, “So the Federal Reserve reduced its balance sheet by $400 billion. $1.5 trillion came out of bank deposits. And so investors can invest in t-bills, money market funds. And of course, banks are competing for the cap of money now. And banks are all in different places. So some banks started competing heavily. Some have a lot of excess cash and maybe compete less.

But if you look at prior — and forget what happened in 2016. I think people make a huge mistake looking at that. We’ve never had queued — these 0 rates. We’ve never had rates go up this fast. So I expect there will be more migration to CD, more migration to money market funds. A lot of people are competing for it, and we’re going to have to change saving rates. Now we can do it at our own pace and look at what other people are doing. We don’t know the timing, but it will happen.”