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Jamie Dimon warns the world order is being challenged and bashes crypto once more

Theron Mohamed   

Jamie Dimon warns the world order is being challenged — and bashes crypto once more
  • US consumer finances are solid but economic and geopolitical risks are looming, Jamie Dimon said.
  • He said inflation, interest-rate hikes, and a possible recession could threaten stability.

Jamie Dimon warned on Tuesday that while many Americans are financially healthy, a variety of economic and geopolitical threats could spoil the party.

The JPMorgan CEO told the Economic Club of New York that people's homes and stock portfolios have surged in value in recent years and they're spending a historically low percentage of their incomes on debt repayments.

People are also benefiting from strong economic growth and near-record employment, but they aren't immune from disaster striking, Dimon said.

"Even if we go into recession, the consumer's in good shape," he said in a clip of the interview posted by Bloomberg. "That doesn't mean you can fight off the effects of stagflation, something like that, if it gets much worse."

"So far, we're in pretty good shape, and so far it looks like a soft landing type of scenario, but put me on the cautious side of that one," he added.

Dimon's circumspect comments reflect a growing uncertainty about the economy.

Inflation has cooled from 40-year highs of more than 9% in the summer of 2022 to below 4% in recent months, but it remains above the Federal Reserve's 2% target.

The Federal Reserve has raised interest rates from nearly zero to north of 5% but has held off on reversing those increases until it's certain inflation is under control. It has signaled it could continue to raise them if prices take off again.

Higher borrowing costs discourage spending, hiring, and investing, and tend to pull down asset prices, which can help curb inflation but can also choke economic growth to the point where a recession sets in.

"If rates go up and you have a recession, that will hurt leveraged companies, jobs, profits, and real estate," Dimon said. "So you can have circumstances where it's a 'triple whammy' negatively affecting the banks."

'Little bit of chaos'

The Wall Street heavyweight also highlighted some geopolitical events that are causing instability, echoing points he made in his recent annual letter and comments on JPMorgan's first-quarter earnings call.

"The geopolitical situation is probably the most complicated and dangerous since World War II," he said, pointing to US-China tensions and the Russia-Ukraine and Middle East conflicts.

Dimon emphasized the impact foreign that conflicts can have on oil and gas prices, international trade, and military relationships, and how those effects can disproportionately hurt poorer countries.

He said the world order is being "challenged" and could descend into a "little bit of chaos" if it realigns.

A vocal skeptic of bitcoin and other cryptocurrencies, Dimon also took a fresh potshot at the crypto industry, saying: "Blockchain is real, we use it, but we've been talking about crypto for 10 years and not a whole lot has come of it."

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