JPMorgan Chase has made headlines all this week, after releasing their Q2 earnings. The national headlines rejoice over another booming quarter, I see the opposite. Everyone’s missing the big picture. Everyone’s focused on the what – the EPS, the revenue, the NII guidance. They’re omitting the what ifs, the cracks under the surface. By the same token, are we so blinded by JPM’s size and dominance that we’re ignoring the landmines JPM has placed all over the battlefield? I think so.

Dimon's Doubts, Discounted Too Easily?

Jamie Dimon, the man himself, has been predicting macro headwinds – tariffs, interest rates, inflation. He's practically begging Wall Street to listen, but it seems everyone's too busy patting themselves on the back for a good quarter. Yes, the capital markets have been doing well, and yes, JPM is benefiting from that upcycle too. But waves crash.

Dimon’s denunciations of crypto, and his AI doom is similarly revealing. He understands the tectonic shifts taking place in the financial landscape. When others are out running after the next shiny object, he’s putting on that impact-absorbing gear.

Dimon acknowledges the potential for significant rate hikes and bond market instability. He’s not just talking — he’s positioning JPM for a 5% rate environment. That tells me he understands there’s a very good chance of a big correction—not just a soft landing. This is not your typical CEO bluster, but a deliberate warning.

Sure, JPM’s managing them in the interim, but that’s not the point—the unintended consequences are what concern me. Tariffs have never been merely a tool for trade policy. They’ve been a means of breaking supply chains, raising costs and sowing discord. And that uncertainty pours into corporate decision-making, which weighs on loan growth – already a source of weakness.

Headcount Cuts: Innovation's Silent Killer?

JPM is clearly telegraphing a 10% reduction in consumer banking headcount over five years. Digitization, they say. Efficiency, they claim. Let's be honest: it's about cutting costs. While I'm all for streamlining operations, where's the line between efficiency and stifling innovation?

Think about it: innovation doesn't come from spreadsheets. It comes from people. From design sprints, from maker labs, from inclement weather at hackathons, from the chaotic hopefulness of trying stuff out. Reducing headcount, with consumer banking being the biggest risk, is a double-edged sword. You risk losing the very talent that will drive your future economic growth.

It's like pruning a rose bush. A bit of pruning can stimulate fresh growth, but over prune and you destroy the flora. With these new rules, is JPM chasing long-term innovation at the cost of short-term profits? Look at what happened to GE. Cost-cutting became an obsession, and they lost their edge. Of course, I’m concerned that JPM could take a similar nosedive, albeit at a smaller magnitude. This concern becomes more acute if the market goes south.

It’s the textbook definition of short-term gain, long-term pain. The market cheers the cost savings now, but what happens five years from now when JPM's competitors, who invested in people, are innovating faster and capturing market share?

Credit Card Debt: A Ticking Time Bomb?

This consumer side of JPM is still a stabilizing force, but you still have JPM with very strong credit card balances and consumer spending. Here's the thing about credit card debt: it's a lagging indicator. It looks good until it doesn't.

Net charge-offs remain low, projected to rise as interest rates normalize over the next several years. Yet JPM’s allowance for credit losses is above industry averages. Will it be sufficient to weather a major economic recession?

Remember 2008? Credit card debt was among the first dominos to fall. Tens of millions lost homes and jobs, defaulted on bills, and the entire underlying financial system itself collapsed. It’s time to stand up and ask ourselves — are we really that far removed from that awful reality?

For JPM’s card services net charge-off rate, we make the national scenario and assume this rises to 3.6%-3.9% of outstandings by 2026. That may sound like a drop in the bucket, but it’s part of a larger trend. Trends, particularly in finance, are prone to dangerous inverse order of creation or sudden reverse twist marks tendencies to accelerate.

I’m not predicting that JPM will default on Tuesday. I’m not saying that the market is wrong in the long run, but the market is being complacent. We're so focused on the current strength of the consumer that we're ignoring the potential for a credit card debt crisis. And that, my friends, is a risk that Wall Street is woefully underestimating—a fact that supporters are avoiding.

In the end, there’s a lot to like and dislike about JPM’s Q2 earnings. There’s strength, to be sure, but there are yawning vulnerabilities that the market is willfully overlooking. As investors, it’s our responsibility to look beyond the hype and demand answers to the hard questions. Are we doing that? I'm not so sure.