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Jamie Dimon heads America’s biggest bank, JPMorgan

Jamie Dimon has warned investors to prepare for an economic “hurricane” as the economy struggles against an unprecedented combination of challenges, including tightening monetary policy and Russia’s invasion of Ukraine.

“ That hurricane is right out there down the road coming our way,” the JPMorgan Chase chief executive officer said at a conference sponsored by AllianceBernstein.

“We don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself.”

Mr Dimon said at JPMorgan’s investor day in May that there were “storm clouds” looming over the US economy, but he said he’s since updated that forecast given the challenges faced by the Federal Reserve as it attempts to rein in inflation.

“Right now it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle it,” Mr Dimon said.

Shares of the company dropped 1.8pc to $129.81 after Mr Dimon’s remarks on the economy, extending this year’s decline to 18pc.

JPMorgan economists last month lowered their growth outlook for the second half of 2022 to a 2.4pc rate from 3pc, for the first half of 2023 to 1.5pc from 2.1pc and for the second half of 2023 to 1pc from 1.4pc.

They cited falling stock prices, higher mortgage rates and a stronger dollar relative to trading partners.

The Federal Reserve is not alone in raising interest rates. 

Major central banks across the globe are plotting interest rate hikes in the fight against inflation and are also preparing to pull support from financial markets by selling down their trillions of euro in holdings of government bonds – a process known as quantitative tightening which will restrict credit availability at a time when growth is slowing dramatically already. 

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Investors greeted the official start of the Fed’s “quantitative tightening” policy with a renewed sell-off across equity and bond markets.

The last time the Fed embarked on this path, back in 2017, policymakers were at pains to emphasise that their intention was to make the balance sheet run-down as smooth as possible and to avoid making an impact on asset prices.

Mr Dimon said that JPMorgan is preparing for that turbulence by being conservative with its balance sheet.

“I kind of want to shed non-operating deposits again, which we can do in size, to protect ourselves so we can serve clients in bad times,” he said.

“That’s the environment we’re dealing with.”

Still, he cited the strength of the consumer, rising wages and plentiful jobs as the “bright clouds” in the economy.

On Wednesday, Wells Fargo chief executive officer Charlie Scharf said he expects the pace of loan growth at the company to moderate after rising in the first quarter.

JPMorgan is America’s biggest bank and Mr Dimon also pushed back in the ‘war on woke’ and defended ‘shareholder capitalism’ against conservatives who have attacked it as discriminatory.

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