Jamie Dimon sees 'happy talk' driving markets as he maintains cautious view

By Steve Gelsi

JPMorgan Chase chief executive is sticking to his outlook that a soft landing for the economy is less likely than markets expect

JPMorgan Chase & Co. Chief Executive Jamie Dimon said Thursday that "happy talk" is driving stocks higher but that he's sticking to his view that the odds of a soft landing for the U.S. economy are about half of what markets expect.

Some of that optimism comes from high stock prices, lower credit spreads and an uptick in dealmaking such as fixed-income trading, as well as the hope that geopolitical upheaval won't hurt economic growth, he said.

Dimon said he's seen buoyant times often followed by unforeseen challenges or crisis, citing the example of the prosperity of 1972 that was followed a year later by inflation and the energy crisis.

"I'm worried," Dimon said in a Bloomberg TV interview posted on X. "Stocks are very high. I think the chances of inflation staying higher, rates going up higher, are greater than people think. My view is, whatever the world is pricing in for a soft landing, I think it's probably half that."

JPMorgan Chase's stock (JPM) was up 0.2% on Thursday as the S&P 500 SPX moved further into record territory and the Dow Jones Industrial Average DJIA broke through 40,000 for the first time.

Also read: Dow Jones tops 40,000 for first time, on track to deliver 'psychological boost' to bulls

Dimon said geopolitics and inflation topped the list of stressors in the economy.

"Geopolitics could create the main stress that we're worried about in terms of oil and gas prices, trade, alliances," Dimon said. "The surprise would be higher [interest] rates because inflation didn't go down."

Higher interest rates, and possibly stagflation, could create problems in real estate, leveraged companies and some private credit, he said.

Looking ahead, Dimon sees inflationary forces at work in the economy, such as the green economy, global remilitarization, infrastructure requirements, the restructuring of trade and fiscal deficits.

The U.S. Federal Reserve is "doing the right thing" by being patient and waiting before making any interest-rate cuts, he said.

Despite the fact that China is on a different side from the U.S. in the Ukraine war, Dimon said JPMorgan Chase continues to serve its clients in that country while remaining cognizant of rising geopolitical risks.

"China is not a natural enemy of the United States," Dimon said. "They have a lot of their own problems. To me, we should work together as best we can. ... We have common interests - climate, anti-nuclear proliferation, anti-terrorism."

Dimon also praised India as a friend of the U.S. with a "very bright future."

JPMorgan Chase isn't planning any major acquisitions, particularly in Europe, and is instead growing by adding branches and personnel around the world, he said, adding that the company is constantly working to upgrade its technology, including through artificial intelligence.

JPMorgan is holding an investor day on Monday.

Also read: Jamie Dimon thinks the odds of a 'soft landing' are about half of what Wall Street expects

-Steve Gelsi

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05-16-24 1454ET

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