Chief Executive of JPMorgan Chase, Jamie Dimon, is one of the most influential individuals in the real of finance and banking, thus when he has something to say on the state of the economy, lots of folks tune in. I mean, he is heading up the world’s largest U.S. bank and fifth-biggest bank overall. He has $41. trillion in assets. He’s famous for being able to wisely lead banks through some pretty difficult times and being able to recognize big opportunities when they pop up. Therefore, it’s wise to pay attention when he speaks.
Here are more details from The Street:
For example, when First Republic Bank collapsed last year, Dimon and JPMorgan swept in, picking up the bank and its wealthy customers on the cheap. Bank analysts fawn over him.
“I think he’s been phenomenal,” veteran bank analyst Dick Bove told this reporter last year. “I’m a Jamie Dimon groupie. He’s done a great job everywhere he has worked.”
What exactly makes Dimon so smart? “He has a broad vision of the financial system and the world,” Bove said. No one wants him to talk about that, but he’s thought out multiple layers, from the top down to how much ATMs cost.”
The Consumer Price Index, or CPI, a popular inflation measure, has remained sticky above 3% since peaking at 9.1% in June 2022. The Federal Reserve’s inflation target is 2%, though it uses a different price indicator, the Personal Consumption Expenditures Price Index, or PCE, as its preferred inflation gauge.
Last Wednesday, markets were ecstatic when the government announced that CPI inflation was 3.4 percent, which was a bit lower than 3.5 percent which is where it sat back in March. I mean, yeah, any kind of reduction is good, but that is a very small improvement, one that most of us wouldn’t even notice in our daily lives. Kind of seems lame to be all hyped up over that, doesn’t it?
However, stocks and bonds went up a tad as well and that made investors a touch more enthusiastic about the possibility of lower inflation, which will then pave the way for the Fed to make an interest-rate cut.
But central bank officials have said that rates will likely stay higher for longer. “Holding our restrictive stance for longer is prudent at this point, as we gain clarity about the path of inflation,” Cleveland Fed President Loretta Mester said Thursday.
Interest-rate futures indicate the Fed will not trim rates until September, according to the CME FedWatch Tool. Money management titan Vanguard is sticking to its view that the central bank will not move at all this year.
Jamie Dimon, too is concerned about inflation. “There are a lot of inflationary forces in front of us,” he told Bloomberg Television. “The underlying inflation may not go away the way people expect it to.”
Dimon then said that higher rates coming alongside inflation could also be a problem in the future.
“If you have higher rates and—God forbid—stagflation, you will see stress in real estate, leveraged companies, and private credit,” Dimon remarked. “My view is whatever the world is pricing in for a soft landing, it’s probably half of that.”
“I think the chances of something going wrong are higher than people think,” the executive said in closing.
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