Jamie Dimon warns that markets are ‘too happy’ and failing to price in a possible US downturn

Jamie Dimon warns that markets are ‘too happy’ and failing to price in a possible US downturn

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

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

  • He said investors are underestimating the potential for bad economic outcomes.

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

Investors are underrating the potential for an economic mishap, JPMorgan chief Jamie Dimon said, doubling down on similar warnings he’s made in recent days.

Speaking with reporters on Friday in a call, 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 fine, Dimon acknowledged, citing support from excess savings, low unemployment, and the record-setting stock market. But difficulties are starting to emerge among lower-income earners, and the bank has noted fractures in subprime auto loans, he said.

According to Quartz, he pushed back on speculation over figures such as interest rates and yields, citing these estimates to often be wrong.

“You have to ask the question: What if other things happen, like higher 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 the same day as JPMorgan’s estimate-beating first-quarter earnings report, with the Wall Street giant posting a 9% year-over-year revenue gain of $41.9 billion. Earnings per share reached $4.44, surpassing a consensus estimate of $4.14 from AlphaSense.

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

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

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

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

Read the original article on Business Insider