- Jamie Dimon highlighted the mounting pressures on America’s economy and financial markets.
- JPMorgan’s CEO, John Paulson, expects increased market volatility and sees a greater likelihood of defaults and meltdowns.
- Dimon stated that US consumer spending could plummet by the end of the summer, as people exhaust their savings from the pandemic.
Jamie Dimon raised concerns about the potential economic collapse and predicted that US consumer spending may slow down by next summer.
According to Sentieo’s transcript, the JPMorgan CEO stated that “We’re just getting closer” to what he and I might consider to be bad events during the bank’s third quarter earnings call.
JPMorgan’s Net Income shrankYear-on-year, the bank decreased by 17% to $10 billion last quarter. This decline was due to the bank adding $808 million to its credit reserve in anticipation of worsening economy that could cause a spike in loan defaults.
Dimon indicated that the gathering storm clouds could either dissipate in a mild recession or a soft wind, or coalesce as an economic “hurricane”, during his Friday call. EchoingHis June warning.
The bank giant boss emphasized the large amount of debt in the system. He noted that it causes market volatility, reduces liquidity, increases the risk of something failing, and fuels market volatility.
“We don’t see anything systemic, however, there is leverage in some credit portfolios, and there is leverage to certain companies,” he stated.
Dimon described the Historical spike in British government-bond yields — which roiled the country’s pensions sector and spurred an emergency market intervention by the Bank of England — as a “bump in the road,” and said he expects similar incidents to occur.
He said, “There will be more surprises.” “Someone will be offside.”
As he believes that the US banking sector is very robust, JPMorgan’s chief has ruled out a US bank meltdown. He suggested that quantitative tightening (QT), and large changes in US dollar flows could be trouble for overseas banks and hedge funds, as well as credit and foreign exchange markets.
Dimon praised the resilience of US consumer spending and noted that household finances are solid and credit card debts have not risen. That said, he suggested steep inflation — exacerbated by the Russia-Ukraine war and volatile energy prices — and rising borrowing costs would deplete people’s pandemic savings by the middle of 2023.
He said, “It’s quite predictable.” “It will strain the future numbers.”
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