JPMorgan is Bracing Itself for Economic ‘Hurricane’

JPMorgan is preparing for an economic hurricane and investors should do the same, the bank’s CEO Jamie Dimon said.

“You know, I said there’s storm clouds but I’m going to change it… it’s a hurricane. That hurricane is right there, down the road, and coming our way,” Dimon said to investors and analysts Wednesday at a New York conference. “We don’t know if it’s a minor storm or if it’s a Superstorm Sandy.”

Dimon said part of that hurricane is created by higher oil prices after Russia’s invasion of Ukraine. “I’m watching the train coming down the tracks and I’m very sad about it,” he noted. The CEO also said “wars go bad” and have unintended consequences. “We’re not taking the proper actions to protect Europe from what’s going to happen to oil in the short run.”

Dimon also warned that the Federal Reserve’s signaling that it will reverse its emergency bond buying programs and shrink its balance sheet will add further volatility. He said that private borrowers may be stranded as financial conditions tighten in response to the Fed’s quantitative tightening.

According to Dimon, central banks don’t have a choice because there’s too much liquidity in the system. “They have to remove some of the liquidity to stop the speculation, reduce home prices and stuff like that.”