JP Morgan number one, Jamie Dimon talks the Fed and the economy, also making an about-face with respect to a previously uttered expression.
The expression is that of “economic hurricane” and dates back to the beginning of June.
On that occasion, the CEO of the number one bank in the United States by asset value – close to rattle off, among other things, the balance sheet results for the fourth quarter of 2022 – warned the world to be ready to, precisely, an economic hurricaneprovoked by the war between Russia and the Ukraine and by Jerome Powell’s Fed monetary tightening.
It must be said that, in his speech, Dimon also prophesied a jump in oil prices to $150 or $175 a barrel (a prophecy which so far is far from coming true, given that in recent months oil prices have marked a sharp decline).
Jamie Dimon: I should never have used that expression
Thus in the interview given to Maria Bartiromo in the broadcast “Mornings With Maria”, aired on Fox Business yesterday:
“I should never have used the word ‘hurricane’ – said the CEO of JP Morgan –I had mentioned storm clouds that could have been mitigated. But I was told that if that were the case, it wouldn’t look like a problem in the end, and so I said those storm clouds might herald a hurricane.”. The point is that “I’m not predicting one thing or another.”
Storm, hurricane, clouds, what does Jamie Dimon think today?
The answer is that, in his view, those storm clouds have already arrived, with the onset of inflation, with i Quantitative Tightening (QT) launched by central banks and with stock markets falling by 20%. In his view, the world must now prepare for times of uncertainty.
Goldman Sachs & Co. licensee, JP Morgan assume
It must be said that, at a time when the mega rivals Goldman Sachs – very recent announcement– , Morgan Stanley and Wells Fargo continue to initiate cuts and layoffs, or otherwise threaten further cost reductions, JP Morgan is continuing to hire.
“So far, we’re in hiring mode – confirmed Jamie Dimon – We have numerous growth projects. You see, I tend not to stop growing because of a recession.” So much so that JP Morgan,”even in a recession, it’s entering new countries. And I believe that all this is very positive for shareholders, in a long-term perspective”.
The banker was also optimistic on the future of IPOs and M&A operations (mergers and acquisitions, mergers and acquisitions), emphasizing that, in his opinion, the context is stabilising.
“There are hundreds of IPOs ready to launch. Which could very well be launched this year. And therefore, if I were in the place of someone who wants to land on the stock market, I would prepare to do so“.
Regarding the Fed, Jamie Dimon’s predictions are not at all comforting.
In the same interview with Fox Business Network, the CEO of JP Morgan said he believes that the Fed’s terminal rate could be 6%, a decidedly higher target than estimated by most economists, who expect a ‘final’ rate above 5%.
READ ALSO
Fed, here is the 2023 meeting calendar
“Whether interest rates at 5% are enough to slow inflation to where it should be, I don’t know,” he said, highlighting the fact that fiscal stimulus is “so important and mostly still unspent…” and adding: “If the terminal rate will be 5? For me it could very well be 6%”.
Last December 14, at the end of the two-day meeting of the FOMC – the monetary policy arm of the Fed – the US central bank announced a rate hike of 50 basis points, to the new range between 4.25% and 4.5%record of the last 15 years.