Posted on 06/01/2022 9:54:55 AM PDT by American Number 181269513
JPMorgan Chase CEO Jamie Dimon says he is preparing the biggest U.S. bank for an economic hurricane on the horizon and advised investors to do the same.
“You know, I said there’s storm clouds but I’m going to change it… it’s a hurricane,” Dimon said Wednesday at a financial conference in New York. While conditions seem “fine” at the moment, nobody knows if the hurricane is “a minor one or Superstorm Sandy,” he added.
“You better brace yourself,” Dimon told the roomful of analysts and investors. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”
Stocks bounced from a precipitous decline in recent weeks on optimism that inflation may be easing. But Dimon seemed to dash hopes that the bottom is in.
“Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this. That hurricane is right out there, down the road, coming our way.”
There are two main factors that has Dimon worried: First, the Federal Reserve has signaled it will reverse its emergency bond buying programs and shrink its balance sheet. The so-called quantitative tightening, or 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,” Dimon said. Several aspects of quantitative easing programs “backfired,” including negative rates, which he called a “huge mistake.”
Central banks “don’t have a choice because there’s too much liquidity in the system,” Dimon said, referring to the tightening actions. “They have to remove some of the liquidity to stop the speculation, reduce home prices and stuff like that.”
The other large factor worrying Dimon is the Ukraine war and its impact on commodities, including food and fuel. Oil “almost has to go up in price” because of disruptions caused by the worst European conflict since World War II, potentially hitting $150 or $175 a barrel, Dimon said.
“Wars go bad, [they] go South in unintended consequences,” Dimon said. “We’re not taking the proper actions to protect Europe from what’s going to happen to oil in the short run.”
Last week, during an investor conference for his bank, Dimon referred to his economic concerns as “storm clouds” that could dissipate. Presentations from Dimon and his deputies at the all-day meeting have bolstered JPMorgan shares by giving greater detail on investments and updated figures on interest revenue.
But his concerns seem to have deepened since then.
During the response to the 2008 financial crisis, central banks, commercial banks and foreign-exchange trading firms were the three major buyers of U.S. Treasuries, Dimon said. The players won’t have the capacity or desire to soak up as many U.S. bonds this time, Dimon warned.
“That’s a huge change in the flow of funds around the world,” Dimon said. “I don’t know what the effect of that is, but I’m prepared for, at a minimum, huge volatility.”
One step the bank could take to gird itself for a coming hurricane is to push clients to move a type of lower-quality deposit called “non-operating deposits” into other places, such as money market funds, for example. That would help the bank manage its capital requirements under international rules, potentially helping it absorb a surge in bad loans.
“With all this capital uncertainty, we’re going to have to take actions,” Dimon said. “I kind of want to shed non-operating deposits again, which we can do in size, to protect ourselves so we can serve clients in bad times. That’s the environment we’re dealing with.”
“I hate the word unprecedented,” Dimon said. “You’ve got to put this in the back of your mind, when we’ve seen things that have never happened before… you have to question your ability to predict” outcomes.
It’s called The Great Reset. They’ve been working on it for years, and it has nothing to do with Putin’s incursion.
I don’t know if he’s right or wrong, but I really dislike Dimon. He lies so easily you just don’t know what to make of what he says.
I watch FBN, Maria has him on whenever she can and is in rapture listening to him.
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Ukraine War is a DEM Scam.
There is no end to that Money boondoggle.
Watch, swamp doesn’t care about the Economy.
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Agreed
Misleading title. I see nothing here about a “Fed and Ukraine War.” Why would the Federal Reserve have an interest in Kyiv, anyway?
Stolen elections have consequences.
The Fundamental Transformation of America proceeds apace, as planned.
The ruin is intentional.
Hail Hydra.
F Dimon. He owns this. Now he’s trying to shuffle over to the other side of the issue. We know better.
So he can’t bring himself to be honest about his libtard buddies and their disastrous leadership clearly and directly causing this? 🤪
Sounds just like fake news
You can bet Biden asked Powell to delay and reduce the number of interest hikes as well as lessening the rate of the QT. It is all about the midterms and the coming recession. The Fed is so politicized, it will go along with Biden making the situation far worse in the long term. Batten down the hatches. The perfect storm is coming.
The other large factor worrying Dimon is the Ukraine war and its impact on commodities, including food and fuel. Oil could hit $150 or $175 a barrel, he said.
The other large factor worrying Dimon is the Ukraine war and its impact on commodities, including food and fuel. Oil “almost has to go up in price” because of disruptions caused by the worst European conflict since World War II, potentially hitting $150 or $175 a barrel, Dimon said.
“Wars go bad, [they] go South in unintended consequences,” Dimon said. “We’re not taking the proper actions to protect Europe from what’s going to happen to oil in the short run.”
Don’t leave out the Climate Change Radicals who are already doing more global damage than actual climate change (if indeed there is any) can ever do in the next 500 years.
But that’s a feature, not a bug.
Never forget that “global warming” was invented by the neo-malthusian Club of Rome as a tool to force a drastic reduction of human populations. see:Maurice Strong.
I have already started. In April my credit card amount was $0.00. Paying cash and only for necessities.
The name “Biden” was not mentioned in the entire article.
Try to imagine the fallout if DJT was POTUS during this disaster (not that he would ever let this disaster occur).
I pay mine off in full each month. The merchants and the banks end up paying for the convivence of floating the payment until month end.
Jimmy Carter’s second term. “Reverend” Al’s first term.
I doubt the Modern Warm Period will last that long. It's already 200 years old. None of the prior warm periods dating back to Moses lasted longer than 600 years, with the shortest one lasting 400 years. So we have 200 to 400 years left in the Modern Warm Period before it becomes another cool period. And if the trend continues, this warm period won't get as warm as the others (each warm period is cooler than the prior one).
"...when the savings rate goes from an out-of-this-world 34% to a rock bottom 4% in just 24 months, you are not dealing with a standard economic cycle."
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