JPMorgan CEO Jamie Dimon: Economic Hurricane Is Coming
The comments below are an edited and abridged synopsis of an article by Belle Carter
JPMorgan CEO Jamie Dimon warned on June 1 that an economic hurricane is coming, because of inflation and the Russia-Ukraine conflict.
“I said there’s storm clouds but I’m going to change it. It’s a hurricane,” he said.
Dimon added that he is preparing the biggest US bank for this superstorm and advised analysts and investors to brace themselves for this collapse.
The CEO emphasized the two issues he is concerned about: the Russia/Ukraine conflict’s effect on prices of commodities and the Fed’s efforts to raise interest rates and reduce its balance sheet to tackle inflation.
The Ukraine war has affected commodities, including food and fuel. “Oil almost has to go up in price because of disruptions caused by the worst European conflict since WWII, potentially hitting $150 or $175 a barrel,” Dimon said.
He also noted that quantitative tightening (QT) is scheduled to begin this month and will ramp up to $95 billion a month in reduced bond holdings. “We’ve never had QT like this, so you’re looking at something you could be writing history books on for 50 years. Several aspects of quantitative easing programs backfired, including negative rates,” he said.
Inflation is at multi-decade high and exacerbated by supply chain disruptions and Covid-19. There are fears that the Fed will inadvertently tip the economy into recession as it combats price increases.