NEW YORK — America’s most influential banker, JPMorgan Chase CEO Jamie Dimon, told investors Monday that the country’s leadership is in full challenge.
Dimon was especially concerned the large and continuing deficit spending of the federal governmentas well as the need for countries like the United States to remilitarize and continue building green infrastructure, all of which will likely keep inflation higher than investors expect.
Because of these problems, Dimon is less optimistic about the U.S. economy achieving a “soft landing,” which he defined as a modest growth along with high inflation and high interest rates, compared to the broader market.
While he says investors are pricing in a “70% to 80%” probability of a so-called “soft landing,” Dimon believes the chances of such an ideal outcome are “much smaller.”
The interest rate could rise to 8%
While some economists wonder whether the Federal Reserve will be able to meet its projection of cutting rates three times this year, Dimon warned of the possibility of rates rising to 8% or higher. The Fed’s reference rate is currently in a range of 5.25% to 5.50%.
“These significant and in some ways unprecedented forces cause us to remain very cautious,” he said.
His statements totally differ from what some economists and the Federal Reserve have announced for 2024.
The ecological transition, the increase in military spending and the fight against rising health costs “drive expenses,” the executive said.
“That could make inflation more tenacious and push (Federal Reserve interest) rates higher than market forecasts,” he warned.
The 68-year-old manager maintained that Investors are too optimistic about the hypothesis of a decline in inflation no recession or modest growth.
The president of JP Morgan warned of geopolitical events such as the war in Ukraine, between Israel and Hamas, as well as political polarization in the United States that “can generate risks capable of eclipsing anything since World War II.”
The comments are part of Dimon’s annual letter to shareholders, which he often uses to comment on a wide variety of topics such as politics, regulation and global events and what they could mean for JPMorgan Chase, as well as the broader economy. .
Dimon also used his letter to forcefully defend the company’s diversity and equality efforts, rejecting arguments that such efforts at Fortune 500 companies, colleges and universities are discriminatory and promote left-wing ideology.
US leadership
“America’s global leadership role is being challenged outside by other nations and inside by our polarized electorate,” Dimon said.
“We need to find ways to put aside our differences and work in partnership with other Western nations in the name of democracy. During this time of great crisis, it is essential that we come together to protect our essential freedoms, including free enterprise.”
Dimon, considered one of the most powerful company directors in the world, insisted in his letter that USA It must reaffirm its position as a world leader based on its military, economic, diplomatic and moral power.
“USA and the free Western world must no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations will not use their economic and military might to achieve their objectives, particularly against what they perceive as weak, incompetent and disorganized Western democracies.” , Dimon emphasized.
Source: With information from AP.
