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It’s a mistake to assume everything is “hunky-dory” in the economy, JPMorgan CEO Jamie Dimon said.
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He added that a rising stock market is like a drug that makes people feel great.
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Geopolitical risks and the Fed’s policy moves have yet to unfurl in the economy, Dimon said.
The stock market’s big rally to close last year may have taken attention away from major risks lurking in the economy, JPMorgan CEO Jamie Dimon suggested.
In an interview on CNBC Wednesday, he urged caution about where the economy is headed in the next couple years as key forces has yet to play out.
“I think it’s a mistake to assume that everything is hunky-dory,” he said. “When stock markets are up, it’s kind of like this little drug we all feel, like it’s just great.”
He cited the massive fiscal and monetary stimulus markets have seen in the past few years as well as a host of geopolitical conflicts unwinding across the globe, such as the war in Ukraine, the Israel-Hamas crisis, and mounting tumult in the Red Sea.
The turmoil has already bled into markets. Oil prices spiked last week, pushing Brent crude over $80 a barrel after the US and the UK retaliated against Houthi attacks on ships in the Red Sea.
Detours from the Middle Eastern waterways are prolonging vessel journeys, which risk repeating pandemic-era supply shocks. And the shipping risks are boosting freight costs so high that it could trigger a second wave of global inflation.
There’s also the implications of the Fed’s monetary policy in recent years, saying he still questions whether markets fully grasp how quantitative tightening will play out and even how much the central bank’s earlier quantitative easing and zero-rate stance had an impact.
“You have all these very powerful forces that are going to be affecting us in ’24 and ’25,” Dimon said. “If I was the government, I would be preparing what I’m going to do about that assuming things aren’t good.”
Read the original article on Business Insider