OPINION: JP Morgan chief executive Jamie Dimon says the ‘storm clouds’ over the global economy can dissipate. But don’t get too excited – he still thinks we’re in unchartered territory.
In a market beset by doom and gloom, the smallest ray of sunshine can raise the hopes of investors.
First, Dimon stressed the US economy was very strong, with the consumer still very healthy – as JPMorgan’s improving financial outlook shows. But he also acknowledged the threats to economic growth were growing, and there was a possibility of recession.“I’m calling it storm clouds because they’re storm clouds. They may dissipate. If it was a hurricane, I would tell you that – or a tsunami, like we had in ’07 or ’08.
The combination of high inflation and quantitative tightening, Dimon said, was highly unusual. Overlaying this was a war in Ukraine, which had, forced up the prices of oil, wheat and other commodities, and may yet have an unpredictable outcome. The idea that a market and economic cycles are different from those seen in the past is usually met with scepticism, but Dimon’s point is well-made.It is hard to find historic parallels for the situation the global economy finds itself in, where high inflation has been caused by unprecedented stimulus in the face of an unprecedented global pandemic that is not over.
Snap shares, already down 52 per cent this year, fell a further 30 per cent in after-market trade, dragging down broader US futures and ending Monday night’s relief rally.