Jamie Dimon, chairman and chief govt officer of JPMorgan Chase & Co., speaks in the course of the Institute of Worldwide Finance (IIF) annual membership assembly in Washington, DC, US, on Thursday, Oct. 13, 2022.
Ting Shen | Bloomberg | Getty Photos
JPMorgan Chase CEO Jamie Dimon stated Monday that whereas the U.S. economic system is doing properly, it could be a “big mistake” to imagine that it’s going to final for years.
Wholesome client stability sheets and rising wages are supporting the economic system for now, however there are dangers forward, stated Dimon, who was talking at a monetary convention in New York. Topping his considerations embody central banks reining in liquidity packages by way of “quantitative tightening,” the Ukraine warfare, and governments world wide “spending like drunken sailors,” the manager stated.
“To say the patron is powerful at this time, which means you’re going to have a booming surroundings for years, is a large mistake,” he stated.
The world’s largest economic system has defied expectations for a downturn for the previous 12 months, together with from prognosticators like Dimon, head of the largest U.S. financial institution by property. Final 12 months, he warned {that a} potential financial hurricane was on the way in which, citing the identical considerations round central banks and the Ukraine battle. However the U.S. economic system has confirmed resilient, main extra economists to anticipate {that a} recession is likely to be prevented.
“Companies really feel fairly good as a result of they have a look at their present outcomes,” Dimon stated. “However these issues change, and we do not know what the complete impact of all that is going to be 12 or 18 months from now.”
Whereas JPMorgan and different banks have been “over-earning” on lending for years due to traditionally low default charges, strains had been rising in elements of actual property and subprime auto lending, Dimon stated.
“If and when you could have a recession, which you are ultimately going to have, you may have an actual regular credit score cycle,” Dimon stated. “In a standard credit score cycle, one thing all the time does worse than” anticipated, he added.
Dimon on laws, markets, China
Dimon struck a notice of warning all through the panel dialogue. JPMorgan is repurchasing inventory at a “decrease stage” than earlier than, a tempo which could final via 2024, he stated, because the financial institution husbands capital to stick to imminent guidelines.
He known as the brand new regulatory mandates “massively disappointing” and pushed for larger transparency from regulators, saying that JPMorgan must maintain about 30% extra capital than European banks.
“Is that what they need? Is that good, long run?” Dimon requested. “What was the goddamn level of Basel within the first place?”
When requested about whether or not the IPO and merger markets had been choosing up given the upcoming Arm itemizing, Dimon stated he inspired CEOs to take motion fairly than ready too lengthy.
“I believe the uncertainties on the market forward of us are nonetheless very massive, and really harmful,” Dimon stated.
Amongst these dangers is the deterioration in relations with China, he stated. Prospects for JPMorgan operations in China went from trying shiny to solely “simply OK” due to the rising dangers, he stated.
“I do not anticipate warfare in Taiwan, however this will go south,” Dimon stated.