JPMorgan Chase CEO Jamie Dimon warned investors on Wednesday that they were preparing for an economic “hurricane” such as the war in Ukraine and the tightening of Federal Reserve market policy.
Dimon set a sadder tone on the economic outlook than in statements he made last week during JPMorgan’s first day of investing in two years, when he referred to the threats as “storm clouds.”
“I said they are storm clouds, here are big storm clouds. It’s a hurricane,” the chief executive officer of the largest U.S. bank for assets said at a financial services conference hosted by Autonomous Research.
“This hurricane is out there, on the road coming to us. We don’t know if it’s smaller or Sandy Superstorm… And you better get ready.”
Dimon’s comments, which are closely followed on Wall Street, came as US equities surprised doubts about the health of the US economy.
Dimon warned investors that the war in Ukraine would continue to put pressure on global commodity markets and that the conflict could bring oil prices up to $ 150 or $ 175 a barrel.
Brent crude, an international benchmark for oil, is currently trading at around $ 117. The EU agreed this week to ban imports of offshore oil from Russia, as it tightens sanctions on Moscow for its invasion of Ukraine.
“We are not taking the right action to protect Europe from what will happen to oil in the short term. And we are not taking the right action to protect you all from what will happen to oil in the next five years, which means that it almost has to go up in price, ”Dimon said.
Dimon also warned of the risk of market volatility as the Fed implements its “quantitative easing” policy, under which it will begin to reduce its balance sheet by approximately $ 9 billion in an effort to combat high inflation.
“They have no choice because there is a lot of liquidity in the system,” he said. “It simply came to our notice then. And you’ve never been to QT. “
With the withdrawal of the Fed, the supply of U.S. Treasury securities available to investors will increase, causing market volatility, Dimon warned.
“This is a big change in the flow of funds around the world. I don’t know what effect this has. I’m ready, you’re talking a minimum [of] great volatility, “he said.
Dimon said the “bright clouds” for the United States were good consumer spending, heavy jobs and rising wages, adding that the banking sector “is in great shape.”
“I think it’s okay to wait for it to end well. I hope so. These are my gold bars, I hope,” Dimon said. “Who the hell knows?”