Jamie Dimon has warned investors to prepare for an economic “hurricane” as the economy grapples with an unprecedented combination of challenges, including monetary tightening and Russia’s invasion of Ukraine.
This hurricane is heading straight for us,” JPMorgan Chase’s chief executive officer said at a conference sponsored by AllianceBernstein.
“We don’t know if it’s a small or Superstorm Sandy. You better get ready.”
Mr Dimon said at JPMorgan’s investor day in May that “storm clouds” were looming over the US economy, but he said he has since updated that forecast in light of the challenges the Federal Reserve faces in trying to curb inflation.
“It’s kind of sunny right now, things are going well, everyone thinks the Fed can handle it,” Mr. Dimon said.
The company’s shares fell 1.8 percent to $129.81 after Mr. Dimon’s comments on the economy, extending this year’s decline to 18 percent.
JPMorgan economists last month lowered their growth prospects for the second half of 2022 to 2.4% from 3%, for the first half of 2023 from 2.1% to 1.5% and for the second half of 2023 from 1.4% to 1 percent.
They cited falling stock prices, higher mortgage rates and a stronger dollar relative to trading partners.
The Federal Reserve isn’t the only one raising interest rates.
Major central banks around the world are planning rate hikes to fight inflation, and are also preparing to enlist support from financial markets by selling their trillion-dollar holdings of government bonds — a process known as quantitative tightening and credit availability at a time when growth is already slowing dramatically.
Investors welcomed the official start of the Fed’s “quantitative tightening” policy with another sell-off in equity and bond markets.
When the Fed last went down this route in 2017, policymakers struggled to emphasize that their intention was to make the balance sheet run-down as smooth as possible and avoid impacting asset prices.
Mr Dimon said JPMorgan is preparing for this turmoil by being conservative with its balance sheet.
“I kind of want to dump non-operating deposits again, which is what we can do at scale to protect ourselves so we can serve clients in bad times,” he said.
“That’s the environment we’re dealing with.”
Still, he cited consumer strength, rising wages and plentiful jobs as “bright clouds” in the economy.
On Wednesday, Wells Fargo chief executive officer Charlie Scharf said he expected the pace of credit growth at the company to moderate after the first-quarter surge.
JPMorgan is America’s largest bank, and Mr Dimon has also pushed back in the “war on waking” and defended “shareholder capitalism” against conservatives who have attacked it as discriminatory.
https://www.independent.ie/business/world/jpmorgan-ceo-warns-of-coming-economic-hurricane-41715658.html JPMorgan CEO warns of coming economic ‘hurricane’