JPMorgan Chase (JPM) CHIEF EXECUTIVE OFFICER Jamie Dimon once more pointed out worldwide instability as his principal worry and called it as one of the reasons rising cost of living might not yet be controlled, stating that “geopolitics is becoming worse.”
“My caution is all geopolitics, which may determine the state of the economy,” Dimon said in an interview with CNBC-TV18 while attending a JPMorgan conference in Mumbai, India.
Geopolitics are ” becoming worse, they are not improving,” he added, pointing to recent attacks by Yemen’s Houthis rebels in the Red Sea. “There’s possibility for crashes in the power supply chain. God understands, if various other nations obtain entailed. You have a great deal of battle occurring today.”
The comments marked the third time in the last week that the boss of the biggest US bank offered new skepticism about the economy’s long-term path despite a new rate cut from the Federal Reserve designed to cushion a cooling labor market as inflation falls back.
< figcaption course=" caption-collapse">Flames and smoke rise from the Greek-flagged oil tanker Sounion on the Red Sea, in August. Yemen’s Houthis said they attacked the Sounion in the Red Sea. /Handout via REUTERS/File Photo (Reuters / Reuters)
On Friday, Dimon poured more cold water on the notion that the US central bank is likely to achieve a soft landing for the economy.
“I wouldn’t count my eggs,” on the outcome, he said at the Atlantic Festival in Washington, D.C.
Last Tuesday, when asked at a Georgetown University event what concerned him from a financial markets perspective, he said that ” one of the most essential point that overshadows all various other points, that’s actually essential, much more essential today after that [its] been, most likely because 1945 is this battle in Ukraine, what’s taking place in Israel [and] in the Middle East, America’s relationships with China, and the strike basically on the regulation of legislation that was established after World War Two.”
Dimon has been warning for some time that the US economy could be more vulnerable than some market observers think, having voiced concerns about a potential stagflationary environment where inflation remains elevated and some rates surge to 7% as the labor market weakens.
” I am not exactly sure if the globe is planned for 7%,” he said at an event in India a year ago.
As recently as August, he said he was still ” a little cynical” that the rising cost of living price would certainly drop back to theFed’s 2% target He likewise stated then that the odds of a recession still occurring were much better than the possibility of a no economic downturn.
Last Tuesday, Dimon recognized the demand for the Fed to start reducing rates of interest however soft-pedaled the value of the reserve bank’s initial step, calling it “a minor thing.”
< figcaption course=" caption-collapse">Jamie Dimon speaks on stage during “The State of the Global Economy” panel for The Atlantic Festival 2024 last Friday. (Photo by Tasos Katopodis/Getty Images for The Atlantic) (Tasos Katopodis via Getty Images)
The coming rate cuts, however, will have an effect on the bank.
That was made clear earlier this month when JPMorgan COO Daniel Pinto warned that the consensus view among analysts for the bank to earn net interest income of $91.5 billion in 2025 was ” not extremely practical” due partly to the effect of falling rates.
While admitting the bank’s financial projections for next year weren’t complete, Pinto said JPMorgan was guiding for expenses to run higher in light of inflation and some other investments while its biggest profit driver, net interest income, looked to be lower due to falling rates.
Net interest income measures the difference between what banks earn on their assets (loans and securities) and pay out on their deposits.
JPMorgan’s stock fell the most intraday since 2020 following Pinto’s comments.
On Tuesday in India, Dimon argued that he’s an optimist in the long term but in the “short run, I’m a little more skeptical than other people that everything is going to be great.”
He warned about inflation’s longer term path even beyond the eruption of more conflict along with existing wars in the Ukraine and the Middle East.
He cited shifting demographics, world trade, remilitarization as well as the green economy transition and medium term implications of artificial intelligence as potential contributors.
He also offered some skepticism about the lagging effects of US economic data releases that have become so pivotal for traders’ expectations of the Fed’s next move on interest rates.
“Underneath the rate, there’s a real economy. No one knows what that real economy is gonna do next year. No one,” he said Tuesday.
“Hopefully, we’ll continue to exhibit growth with inflation coming down. I’m a little more skeptical about that, but it is happening,” he admitted.
“Markets are pricing things like they’re gonna be great. Put me on the cautious side of that one,” he added.
As for politics, Dimon said he doesn’t endorse either political candidate currently running for President. And ” I do not anticipate to be the treasury assistant.”
David Hollerith is an elderly press reporter for Yahoo Finance covering financial, crypto, and various other locations in financing.
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