On Monday, Jamie Dimon, CEO of JPMorgan Chase, cautioned that one should not assume that the strong U.S. economy will continue indefinitely. According to Dimon, the danger posed by the reduction of liquidity support by central banks through "quantitative tightening," the conflict in Ukraine, and the profligate spending of governments around the world, are all cause for concern. He concluded that, while the consumer may be doing well currently, it would be wrong to presume that it will lead to a sustained flourishing environment.
At a financial conference in New York on Monday, JPMorgan Chase CEO Jamie Dimon stated that although the U.S. economy is currently doing well, it would be a "huge mistake" to think this trend would persist for extended periods. With healthy consumer balance sheets and rising wages driving current output, he cautions of looming risks, including quantitative tightening by central banks, hostilities in Ukraine, and governments spending beyond their means. Dimon argued that while businesses may be feeling optimistic about their current results, the true impact of these risks may not be known for 12-18 months. Even in the absence of a downturn, he warned of strains in certain sectors of real estate and subprime auto lending. He concluded by noting that a recession is likely inevitable, and that "something always does worse than expected" during a normal credit cycle.
Throughout the panel discussion, Dimon struck a note of caution. He noted that JPMorgan is repurchasing stock at a "lower level" than before, a pace which might last through 2024, as the bank tries to adhere to upcoming rules. He expressed disappointment at the regulatory mandate, asserting that JPMorgan would have to hold about 30% more capital than European banks, and questioned the purpose of the Basel guidelines. When asked about the IPO and merger markets given the impending Arm listing, Dimon urged CEOs to take action without delaying. He warned of the dangers of the uncertain future and highlighted the deteriorating relations with China, saying that prospects for JPMorgan operations in the country went from looking bright to just "OK" because of the risks. He even acknowledged the risk of war in Taiwan, saying, "I don't expect war in Taiwan, but this can go south."
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