JPMorgan CEO Jamie Dimon has warned that an economic “hurricane” is brewing. “You better get ready,” he advised. “We just don’t know if it’s Minor or Superstorm Sandy.”
Jamie Dimon on the US economy and QT
JPMorgan & Chase CEO Jamie Dimon warned of an impending economic hurricane Wednesday at a financial conference sponsored by Alliancebernstein Holdings.
“It’s a hurricane,” exclaimed Dimon. While noting that “right now the weather is a bit nice, things are going well, everyone thinks the Fed can handle it,” the JPMorgan executive said:
This hurricane is right over there on the road coming our way. We just don’t know if it’s Minor or Superstorm Sandy… You better be prepared.
The JPMorgan chief said in May that there were “storm clouds”. However, he has now revised his forecast. “I said there were storm clouds, they’re big storm clouds, they’re – it’s a hurricane,” he warned. “JPMorgan is preparing and we are going to be very conservative with our balance sheet.”
Dimon is concerned about several key issues. First, the Federal Reserve should cancel its emergency bond buying programs and reduce its balance sheet, and quantitative tightening (QT) should begin this month.
The JPMorgan boss said:
We’ve never had a QT like this, so you’re looking at something you could write history books about for 50 years.
He explained that central banks “have no choice because there is too much liquidity in the system… They have to withdraw some of the liquidity to stop speculation, reduce house prices and stuff like that” .
Dimon is also worried about the Russian-Ukrainian war and its impact on raw materials, especially food and fuel. He warned that oil could potentially reach $150-175 a barrel.
Warning that “wars go wrong” and that there are “unintended consequences”, the executive pointed out:
We are not taking the appropriate measures to protect Europe from what will happen to oil in the short term.
Last month, Dimon told Bloomberg that the Federal Reserve should have acted sooner to raise interest rates. He admitted he feared the Fed could trigger a recession.
A growing number of people have recently warned of a recession, including Big Short investor Michael Burry, Allianz chief economic adviser Mohamed El-Erian and Tesla CEO Elon Musk.
Blackrock, the world’s largest asset manager with nearly $10 trillion under management, recently explained: “If they [the Fed] raise interest rates too much, they risk triggering a recession. If they don’t tighten enough, the risk becomes runaway inflation.
What do you think of JPMorgan CEO Jamie Dimon’s warning? Let us know in the comments section below.
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