JPMorgan Chase CEO Jamie Dimon: Geopolitical instability is the biggest concern
JPMorgan Chase CEO Jamie Dimon once again warned that geopolitical instability is the biggest risk globally, believing it affects the economic situation. He mentioned the risks of energy supply and the impact of multiple wars, especially the Houthi attacks on oil tankers in Yemen. Despite the Fed rate cut, Dimon remains cautious about the optimism towards the U.S. economy and markets, believing that geopolitical risks outweigh high inflation or economic recession. He also mentioned the possibility of future oil supply shortages and expressed doubts about a soft landing for the U.S. economy
After Morgan Stanley's CEO, Damon, identified geopolitical risks as the world's biggest threat a year ago, he once again sounded the alarm, warning that the global stability situation is worsening.
During his visit to India, Damon stated in an interview, "My warning is about all geopolitical issues, which may determine the state of the economy. Geopolitics are deteriorating, not improving. There are risks of accidents in energy supply. Who knows if other countries will intervene. There are many wars going on now," referring to the attacks by Houthi rebels in the Red Sea.
According to the US military, Houthi rebels have attacked at least two oil tankers this month.
"The instability of geopolitics is my biggest concern," Damon said. He also urged the US to prepare for the long-standing war between Ukraine and Russia.
Damon believes that geopolitical risks are greater than high inflation or a US economic recession.
After prolonged stubborn inflation, the Federal Reserve made a significant rate cut last week, the first since March 2020. Traders followed suit, pushing the S&P 500 index to a new closing high on Monday.
However, Damon expressed doubts about the US economy and its market pricing.
He said, "I am a long-term optimist, but in the short term, I am more skeptical of those who say everything will be fine. Market pricing indicates everything will be fine. Let me stand on the cautious side."
When asked about the impact of the US elections on geopolitics, Damon said, "I believe US policy towards Israel will remain largely unchanged—supporting Israel and promoting peace."
Damon stated that the prices of oil and natural gas are determined by supply and demand. This also includes emotions and inventory. Overall, there is currently oversupply. Due to Ukraine, Europe has had to change its flow. This is a good lesson when discussing the security, reliability, and affordability of energy. Looking ahead, there may be a shortage of oil in the future. This may happen in the next year or two.
Damon is cautious about whether the US economy will achieve a soft landing and believes that the Fed's rate cut was the right move. He said, "A rate cut of 50 basis points may be the right choice. The underlying economy is still growing. But remember, they are also reacting to economic growth. Prices have been falling smoothly. So far, everything is fine."