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Jamie Dimon warns that markets are ‘too happy’ and are not pricing in a possible downturn in the US

Jamie Dimon, CEO of JPMorgan Chase, in Washington DC in 2022.Tom Williams/CQ-Roll Call, Inc via Getty Images

  • The markets are “too happy” right now, JPMorgan CEO Jamie Dimon told reporters in a post-earnings call.

  • He said investors were underestimating the potential for poor economic outcomes.

  • His comments coincided with JPMorgan’s release of record first-quarter profits.

Investors are underestimating the chance of an economic crash, JPMorgan CEO Jamie Dimon said, repeating similar warnings he has made in recent days.

Speaking to reporters on Friday, the prominent CEO characterized markets as “too happy,” saying that “the chance of bad outcomes is higher than people think.”

For now, the economy appears to be doing well, Dimon acknowledged, citing support from excess savings, low unemployment and the record-breaking stock market. But problems are starting to emerge among lower income earners, and the bank has noticed breaks in subprime auto lending, he said.

According to Quartz, he has pushed back on speculation about numbers like interest rates and yields, saying these estimates were often wrong.

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“You have to ask the question: What if other things happen, like higher interest rates, or a modest recession, etc., and then all these numbers change?” he said. “I just don’t think any of us should be surprised if and when that happens.”

These comments came on the same day as JPMorgan’s forecast first-quarter earnings report, with the Wall Street giant posting a 9% year-over-year revenue gain of $41.9 billion. Earnings per share were $4.44, surpassing the AlphaSense consensus estimate of $4.14.

In a related press release, Dimon celebrated the bank’s strong quarterly performance but warned of “significant uncertain forces,” including geopolitical tensions, inflationary pressures and the unknown effects of large-scale quantitative tightening.

Both the call and the press release reflected the cautious sentiment in a letter to shareholders that Dimon published just four days earlier: in it, he warned that the world was entering the most “treacherous” era since World War II, and disagreed with the markets about the chances of a US soft landing.

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JPMorgan CFO Jeremy Barnum echoed Dimon’s views during his own call with reporters on Friday:

“The economic, geopolitical and regulatory uncertainties that we have been talking about for some time remain prominent,” he said, as quoted by Quartz. “And we are focused on being prepared to deal with these challenges, as well as any others that come our way.”

Read the original article on Business Insider

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