JPMorgan Chase chief govt Jamie Dimon predicted the American financial system will tip right into a recession subsequent yr, warning the downturn threatened to spark “panic” in credit score markets and wipe an extra 20 per cent from the worth of US shares.
The feedback from Dimon, whose financial pronouncements are intently adopted by traders, adopted related remarks final month by billionaire investor Ken Griffin and level to a rising consensus amongst senior figures on Wall Avenue concerning the probability of a US recession.
In an interview with CNBC on Monday, Dimon listed rising rates of interest and Russia’s invasion of Ukraine as elements stoking the chance of a downturn in 2023.
“These are very, very critical issues, which I feel are more likely to push the US and the world — I imply, Europe is already in recession — they usually’re more likely to put the US in some sort of recession six to 9 months from now,” Dimon mentioned.
Dimon mentioned early indicators of misery had been evident within the monetary system, pointing to the depressed marketplace for preliminary public choices and high-yield debt offers, and anticipated the ache would quickly unfold into different areas.
“The seemingly place you’re gonna see extra of a crack and perhaps somewhat bit extra of a panic is in credit score markets,” he mentioned.
In June, Dimon warned of an financial “hurricane”, and on Monday he once more inspired traders to be “very, very cautious”. He added: “In case you want cash, go elevate it.”
Requested the place he noticed the trough for the benchmark S&P 500 share index, which is down greater than 20 per cent this yr, Dimon mentioned the decline should “have a methods to go” and “could possibly be one other straightforward 20 per cent”.
“I feel the subsequent 20 per cent can be way more painful than the primary. Charges going up one other 100 foundation factors are much more painful than the primary 100 as a result of folks aren’t used to it.”
JPMorgan, the biggest US financial institution by belongings, will report earnings on Friday. Analysts anticipate JPMorgan and different huge banks will collectively put aside greater than $4bn to cowl potential losses from dangerous loans, in an indication of rising pessimism concerning the US financial system.
