JPMorgan CEO Jamie Dimon has warned that an economic “hurricane” is coming. “You better brace yourself,” he advised. “We just don’t know if it’s a minor one or Superstorm Sandy.”
Jamie Dimon: The U.S. Economy & QT
The CEO of JPMorgan & Chase, Jamie Dimon, warned about an incoming economic hurricane Wednesday at a financial conference sponsored by Alliancebernstein Holdings.
“It’s a hurricane,” Dimon exclaimed. While noting that “Right now it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle it,” the JPMorgan executive stressed:
The hurricane is coming right up the road. We just don’t know if it’s a minor one or Superstorm Sandy … You better brace yourself.
The JPMorgan chief said in May that there were “storm clouds.” However, he has now revised his forecast. “I said there’s storm clouds, they’re big storm clouds, they’re — it’s a hurricane,” he cautioned. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”
Dimon is worried about several important issues. Primarily, it is likely that the Federal Reserve will reverse its emergency bond-buying program and reduce its balance sheet. QT is also scheduled to commence this month.
According to JPMorgan’s boss,
We’ve never had QT like this, so you’re looking at something you could be writing history books on for 50 years.
He explained that central banks “don’t have a choice because there’s too much liquidity in the system … They have to remove some of the liquidity to stop the speculation, reduce home prices and stuff like that.”
Dimon also worries about Russia-Ukraine’s war and the impact it will have on commodity prices, such as food and fuel. According to Dimon, oil could reach $150 to $175 per barrel.
Warning that “wars go bad” and there are “unintended consequences,” the executive stressed:
We’re not taking the proper actions to protect Europe from what’s going to happen to oil in the short run.
Bloomberg reported last month that Dimon said the Federal Reserve had to act sooner in raising interest rates. He acknowledged that he worries about the Fed starting recession.
A growing number of people have recently warned of a recession, including the Big Short investor Michael Burry, Allianz’s chief economic advisor 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]They risk inducing a recession if they increase interest rates too high. If they tighten not enough, the risk becomes runaway inflation.”
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