JPMorgan Chase & Co. (JPM) CEO Jamie Dimon once again cited global instability as a top concern, citing it as one reason inflation is still out of control. Geopolitics is deteriorating.”
“What I’m concerned about is geopolitics that could dictate the state of the economy,” Dimon said in an interview with CNBC TV18 while attending a JPMorgan conference in Mumbai, India. .
He pointed to recent attacks by Yemen’s Houthi rebels in the Red Sea and added that geopolitics is “getting worse, not better.” “Accidents can happen in the energy supply chain. God knows if other countries will be involved. There are a lot of wars going on right now.”
The comments come as the heads of America’s largest banks face renewed skepticism about the long-term trajectory of the economy, despite new interest rate cuts by the Federal Reserve aimed at easing the labor market chill from a rebound in inflation. This is the third time in the last week that I have expressed this view.
In August, flames and smoke rose from the Greek-flagged oil tanker Sounion in the Red Sea. Yemen’s Houthis have announced an attack on Sounion on the Red Sea. (Reuters/File photo) (Reuters/Reuters)
Mr. Dimon on Friday poured further water on the view that the U.S. central bank is likely to achieve a soft landing for the economy.
“I don’t count my eggs,” he said of the result at the Atlantic Festival in Washington, D.C.
When asked last Tuesday at a Georgetown University event what he was concerned about from a financial markets perspective, he said, “The most important thing that dwarfs everything else, that’s really important. It’s probably much more important today than it has been since 1945, the war in Ukraine, what’s happening in Israel (and) the Middle East, the relationship between the United States and China, and the laws that were established after World War II. It’s a fundamental attack on control.”
Mr. Dimon has long warned that the U.S. economy could be more vulnerable than some market players believe, with inflation remaining high as the labor market weakens and some had expressed concern about a potential stagflation environment with interest rates rising to 7%.
“I don’t know if the world is ready for 7%,” he said at an event in India a year ago.
He said in August that he was still “somewhat skeptical” that inflation would fall to the Fed’s 2% target. He also said the probability of a recession still occurring is higher than the probability of no recession.
Read more: Fed rate cuts: What they mean for bank accounts, CDs, loans, and credit cards
Mr. Dimon last Tuesday acknowledged the need for the Fed to start lowering rates, but downplayed the importance of the Fed’s initial action, calling it “minor.”
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Last Friday, Jamie Dimon spoke on stage at the Atlantic Festival 2024’s “State of the Global Economy” panel. (Tassos Katopodis/Getty Images for the Atlantic) (Tassos Katopodis via Getty Images)
However, future rate cuts will have an impact on banks.
This comes after JPMorgan Chief Operating Officer Daniel Pinto said earlier this month that the consensus among analysts that the bank would earn $91.5 billion in net interest income in 2025 was due in part to lower interest rates. This became clear when he warned that it was “not very reasonable.”
Pinto acknowledged that the bank’s financial forecast for next year is not perfect, but said JPMorgan is directing expenses to rise to account for inflation and other investments, while net He said interest income is expected to decline due to the decline. Fee.
Net interest income measures the difference between the income a bank earns on its assets (loans and securities) and the amount it pays out on deposits.
Following Pinto’s comments, JPMorgan shares suffered their biggest intraday decline since 2020.
In India on Tuesday, Mr. Dimon insisted that while he is an optimist in the long term, he is “a little more skeptical than some people that in the short term, everything will work out.”
He warned of a long-term trajectory for inflation, even beyond the outbreak of further conflicts on top of existing wars in Ukraine and the Middle East.
He cited demographic changes, global trade, remilitarization, the transition to a green economy, and the medium-term impact of artificial intelligence as potential factors.
He also expressed some skepticism about the impact of delays in the release of U.S. economic data, which have been crucial to traders’ expectations of the Fed’s next move on interest rates.
“Below interest rates is the real economy. No one knows what the real economy will do next year. No one does,” he said on Tuesday.
“We want to continue to show growth as inflation declines. I’m a bit skeptical about that, but it’s happening,” he acknowledged.
“The market is pricing things as if they’re going to be great. Put me on the cautious side about that,” he added.
As for politics, Mr. Dimon does not support any political candidates currently running for president and said he has “no expectations of being Treasury secretary.”
David Hollerith is a senior reporter at Yahoo Finance, covering banking, cryptocurrencies, and other financial areas.
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