JPMorgan Chase CEO Jamie Dimon simply issued a significant warning on the place he believes the US financial system is heading.
At AllianceBernstein’s Strategic Selections convention, Dimon mentioned he’s betting unchecked authorities spending will finish in stagflation – the time period for a dreaded mixture of excessive inflation, excessive unemployment and low development, experiences Fortune.
“I take a look at the quantity of fiscal and financial stimulus that has taken place over the past 5 years. It has been so extraordinary. How will you inform me it gained’t result in stagflation?
It won’t. However I, for one, am fairly ready for it.”
Per week in the past, on the banking big’s World Summit in Shanghai, Dimon instructed CNBC he additionally believes the Federal Reserve will not be finished elevating charges.
“I feel inflation is stickier than folks suppose. I feel the percentages are greater than different folks suppose, largely as a result of the large quantity of fiscal financial stimulus continues to be within the system, and nonetheless could also be driving a few of this liquidity…
I take a look at the vary of outcomes and once more, the worst end result for all of us is what you name stagflation, greater charges, recession. Which means company income will go down and we’ll get by way of all of that.”
Dimon’s financial outlook echoes a warning from JPMorgan’s chief market strategist Marko Kolanovic just a few months in the past.
“We imagine that there’s a threat of the narrative turning again from Goldilocks in the direction of one thing like Seventies stagflation, with important implications for asset allocation…
Traders needs to be open-minded that there’s a situation through which charges want to remain greater for longer, and the Fed could have to tighten monetary circumstances.”
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