Jamie Dimon, CEO of global investment bank JP Morgan, warned that the US economy could turn into a recession in six to nine months. The executive stressed that “this is a serious situation,” adding that the stock market could easily fall another 20%.
JPMorgan CEO Jamie Dimon Warns
JPMorgan CEO Jamie Dimon, in an interview with CNBC on Monday at the JPM Techstars conference in London, U.S. economy and stock market, he offered a warning about the economy and the stock market.
Dimon cited a number of indicators that could push the U.S. economy into recession, including runaway inflation, higher-than-expected interest rates, the effects of quantitative easing, and the Russia-Ukraine war. Europe is already in recession,” said the JP Morgan boss.
These are very, very serious situations, and six to nine months from now, the United States and the world… I think it’s very likely that they will push us into some sort of recession.
The executive noted that the Federal Reserve “has clearly caught up” as inflation has reached a 40-year high, and emphasized that the central bank “waited too long and did nothing.” Dimon opined that ” And you know, from here, let us all wish him (the Fed chairman) success and pray that they were able to slow the economy enough to be calm, whatever it is – and it is possible.”
Still, he believes that the U.S. economy is “actually still doing well,” adding that consumers are likely in better shape than they were during the 2008 global financial crisis. He cautions, however, that.
But you can’t talk about the economy without talking about the future – and this is serious stuff.
When asked how long the U.S. economy is likely to remain in recession, he admitted he is not certain and advised market participants to assess the range of outcomes. He said, “How this war plays out could range from very mild to quite severe. So it is difficult to speculate and we need to be prepared,” the JP Morgan chief said.
Dimon was also asked about the outlook for the S&P 500. He stressed that the market is volatile and the benchmark could fall further from its current levels. ‘We may still have a ways to go. It really depends on what you mean by soft landing or hard landing, and it’s hard to answer because we don’t know the answer … it could easily be 20% again,” the JP Morgan executive replied, elaborating further.
The next 20% will be much more painful than the first 20%.
“Another 100 basis points increase in interest rates is much more painful than the first 100 because people are not used to it, and I think negative rates – when all is said and done – were a complete failure,” he concluded. As of this writing, the S&P500 is already down 25% for the year; the P500 is already down 25% since the beginning of the year.
In June, Dymon warned that an economic hurricane was coming and advised people to brace themselves; in August, the JP Morgan boss doubled down on his warning, warning that “something worse” could be coming than a recession.
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