I , personally, have never been his follower, so I have no insights into how accurate his assessments have been. But I have noticed his opinions usually receive a lot of attention and focus in the markets, so is probably a good idea to have at least a sense of the views he shares, especially because of the importance of the big banks.
Also, going forward we could asses how good they are, or close to reality they are.
The Fed was right to hike as quick as they did, they are right to pause here to see what happens, but he suspect they may not be done, there is a change in inflation is a little sticker than people think. Maybe they will need to do 25/50/75 more, he is not predicting it, just think is a higher probability than people think
For the long end part of the curve he still thinks it could go to 6/7% due to huge supply and not enough demand. He does not see it as a prediction, he sees it as a probable outcome you will need to risk manage if you have a company
Credit spreads are still very low, they could go up too, creating a double whammy for investors
He thinks QT at some point will rattle the markets (as in 2019 and 2020), showing first on treasuries, but moves recently is not really the real pain we could see
Is better to not try to predict just 1 thing happening, since no one is always good about predicting inflection points, and is better to see the world as a range of possible outcomes, and risks manage them.
Geopolitical risks are the most important to keep in mind currently, since is still very uncertain how they will develop.
They have reduced lending in some parts of business, but they were not that involved since the beginning in the most risky parts.
About excess savings: lower 30% don’t have excess savings anymore, the middle class is very close to zero, and only the wealthy are the ones that have enough still.
There is still some hopeful parts about America, is still the most prosperous and trusted country, but the current political issues need to improve. https://www.youtube.com/watch?v=ShZ3Kr6j_dE
Jamie Dimon wants the Fed to wait past June to start cutting interest rates.
“I think they have to be data-dependent. If I were them, I would wait,” Dimon said at the Australian Financial Review business summit.“You can always cut it quickly and dramatically. Their credibility is a little bit at stake here. I would even wait past June and let it all sort it out.”
He pointed out that the U.S economy is doing so well that it could almost be described as a boom but is against the soft landing narrative that’s being pushed by markets.
He said the odds of a recession is around 65% and failed to rule out stagflation.
Dimon sees a little of bubble in the equity markets that he says started at the end of 2023.
Consumer is still in pretty good shape. But a lot is being driven by fiscal spending, which requires to be more cautious as it can have other consequences down the road → inflation (1:00)
In the range of possible outcomes, he is not inclined to believe in the soft landing. He is more worried inflation may not go away as people expect, talking about 2025 and 2026 too. (1:40)
Rates may need to go a little higher, the 10 and 5 years rates, which could have consequences (1:52)
He still sees the world as a range of possible outcomes, currently, the issues he has been pointing out are more long-term inflationary: huge fiscal spending, fiscal deficits not expected to go away anytime soon, the green economy, remilitarization of the world, geopolitics. (2:45)
Market pricing around a 70% possibility of a soft landing, which he thinks is half of that. He thinks this environment looks a bit more more like the 1970’s(3:10)
As a business person you can’t be carried away or fall into a false sense of security that if today looks ok, tomorrow is also going to be okay. Need to separate the two. (3:21)
He remains on the cautious side, especially with QT, we have never experienced in the past this level of QE and QT before, and he is not sure yet about the full consequences in the long term, as some people seem to be, thinking that nothing will happen (4:00)
