In an earnings release on Friday, JPMorgan Chase (JPM) CEO Jamie Dimon issued a warning about sticker inflation and that the economy is “being fueled by large amounts of government deficit spending and past stimulus." Dimon also points towards the increased amount of expenses that have increased for the bank.

Hennessy Funds Portfolio Manager Dave Ellison joins Yahoo Finance to break down these expenditures and whether or not they will truly affect the greater bank sector.

"Expenses are usually an offensive thing, so I don't think you cut yourself to a high stock price," Ellison explains. "So I think generally the expenses are reflective of obviously there's inflation in the industry, and these guys have a lot of brick and mortar that they need to take care of, but there is a lot of expenses competing with the onslaught of technology and other areas that they're trying to compete against."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

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Editor's note: This article was written by Nicholas Jacobino.

Video Transcript

JARED BLIKRE: I want to ask you about Jamie Dimon's comments about some of the number points in JP Morgan's earnings and expenses. They have jumped 29% to 24 and a half billion dollars, so the banks have to spend more than analysts were expecting. Meanwhile, Jamie Dimon has been vocal about being concerned about inflation. Do these things too-- do these two things tie together? And what's the expense outlook for some of these big banks?

DAVE ELLISON: Well, I'm not-- expenses are usually an offensive thing, so I don't think you cut yourself to a high stock price. So I think, generally, the expenses are reflective of, obviously, there's inflation in the industry and these guys have a lot of brick and mortar that they need to take care of. But there is a lot of expenses competing with the onslaught of technology and other areas that they're trying to compete against. So I'm not-- I think if you're trying to cut expenses, you better have a really good reason for it. If you're just cutting expenses to make the analysts happy, that's a mistake.

JOSH LIPTON: And Dave, let's just stick with JP Morgan there because interesting reversal in the stock today. We started off higher, Dave, after. Now, we're kind of modestly lower here in today's trade.

Seven straight quarters, Dave, of record net interest income. You know, JP Morgan was a winner in 2023. Do you still like it, Dave, here in 2024?

DAVE ELLISON: You know, I do. I think the-- you know, I've been following banks since the early '80s. And in the early days, the small banks were the place to be because that's where the consolidation was, that's where the balance sheet repairs were happening. When there was a problem, there was a lot of problems. And then they got better, you made money on the recovery.