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Jamie Dimon is getting more bearish on the stock market.
The CEO of JPMorgan Chase (NYSE:JPM) and one of the most influential voices in finance says he would not buy either stocks or U. S. Treasuries at current prices. And investors, he added, are ignoring some significant threats to the market.
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In an extensive conversation with CNBC, Dimon pointed to growing geopolitical tensions around the world, including the U.S.-Iran war and the ongoing war in Ukraine.
“I do think those risks are probably bigger than other people think,” Dimon said
Investors, seemingly, are downplaying the conflicts and have been for some time. The Dow is up nearly 8% year to date, the S&P 500 is up around 10% and the Nasdaq index has gained about 11%. Dimon acknowledged that any concerns about the wars as they stand now may be already baked into the markets. His fear, he said, is some other trigger that has not yet occurred.
“It’s possible something’s baked in, but what’s not baked in is what actually happens,” he said.
A looming crisis?
Dimon has been warning about the markets for some time now. In May, while speaking at an investment conference in Oslo, Norway, he said, “The way it’s going now, there will be some kind of bond crisis, and then we’ll have to deal with it.”
Dimon cited several reasons for that prediction, including geopolitical events, which he expects to increase the cost of oil and other energies, as well as defense production. Higher oil prices stoke inflation. And as government deficits continue to rise, he said, that can make investors in government bonds lose confidence.
Last year, Dimon predicted a coming “crack” in the bond market, saying, “It is going to happen. And I tell this to my regulators, some of you who are in this room, I’m telling you it’s going to happen, and you’re going to panic.”
And in an October interview with the BBC, Dimon said he was “far more worried than others” about a serious market correction. While he declined to put an exact timeline on his bearish prediction, he said it could come anywhere from six months to two years from now.
“I say the level of uncertainty should be higher in most people’s minds than what I would call normal,” he said at the time.
AI thoughts
In his chat with CNBC, Dimon said that while he might buy an individual stock if it was “a great investment,” he wouldn’t be a buyer of the general market and would not buy long-dated Treasuries.
Asked about AI stocks, Dimon acknowledged the high levels of spending, but did not indicate he felt it was wasteful. He likened this spending to the financial outlay for Internet companies, which eventually evolved into corporate giants, despite some failures along the way.
“The amount of money being spent is huge. Will it in total pay off? Probably, just like the internet did,” Dimon said. “Will it pay off the way you expect and the timetable you expect? Definitely not.”
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