to write—and receive—handwritten letters. When he got out his pen last year and wrote to Larry Fink, boss of BlackRock, he explained to the passive-investing billionaire that he was doing so because he believed they shared a mutual interest: letter-writing. Your columnist went so far as to use a John Donne quote, “letters mingle souls”, to elicit a response. Evidently soul-mingling, whatever its merits in Elizabethan England, is not the done thing in Hudson Yards.
The main pressure on companies in this round of results will be to prove their worth. Buoyed by expectations of lower interest rates, the recent rally has lifted the share prices of the big companies that make up the500 index. The index’s ratio of price to earnings looks high compared with the average of the past five years. Yet inflation has not fallen as fast as hoped—and therefore nor have rates. For the lofty valuations to be justified, in other words, earnings must rise.
Days after Mr Dimon’s letter was published, his words came back to haunt him. Fears of a long spell of higher interest rates contributed to a rare slump in JPMorgan Chase’s share price on April 12th, decent first-quarter results notwithstanding. Meanwhile, tensions in the Middle East put upward pressure on oil prices, further stoking fears of inflation. Mr Jassy also alluded to economic uncertainty in inflationary times.
In business, the worse your balance-sheet, the higher the interest-rate risk. That is true in society at large. As Mr Dimon points out, nearly 40% of Americans do not have $400 in savings to deal with emergency payments such as medical bills or car repairs. His was not a cheerful letter. It was a bleakly powerful one.