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Jamie Dimon delivers surprising message about inflation
Jamie Dimon, the vaunted CEO of JPMorgan Chase bank.
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What exactly makes Dimon so smart? “He has a broad view of the financial system and the world,” said Bove. No one wants him to talk about it, but he thought about it on multiple layers, from top to bottom to how much ATMs cost.”
So you might be interested in hearing what Dimon says about inflation, the number one economic issue of recent years.
What’s happening with inflation
The Consumer Price Index, or CPI, a popular measure of inflation, has remained stable above 3% since peaking at 9.1% in June 2021. The Federal Reserve’s inflation target is 2%, although use a different price indicator, the Personal Consumption Expenditure Price. Index, or PCE, as your preferred inflation gauge.
Related: Billionaire Fund Manager Griffin Predicts Fed Rate Cuts in 2024
Financial markets cheered on Wednesday when the government announced that CPI inflation registered 3.4%, down from 3.5% in March. Stock and bond prices rose as some investors became more enthusiastic about the possibility of lower inflation quickly paving the way for a reduction in interest rates by the Fed.
But central bank officials said rates were likely to stay higher for longer. “Maintaining our restrictive stance longer is prudent at this time as we gain clarity on the path of inflation,” Cleveland Fed President Loretta Mester said Thursday.
Interest rate futures indicate the Fed will not cut rates until September, according to the CME FedWatch tool. Monetary management titan Vanguard maintains its view that the central bank will not budge this year.
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The latest economic data “underlines how far we are from what we would call evidence of sustainable progress in the fight against inflation,” said Roger Aliaga-Diaz, chief Americas economist at Vanguard.
Jamie Dimon’s uncompromising view on inflation
Jamie Dimon is also worried about inflation. “There are a lot of inflationary forces ahead of us,” he told Bloomberg Television. “Underlying inflation may not go away in the way people expect.”
The story continues
He said higher rates that accompany inflation could also be a problem. “If there are higher rates and – God forbid – stagflation, we will see stress in real estate, leveraged companies and private credit,” Dimon said.
More economic analysis:
Higher rates have mixed implications for you. On the downside, they mean higher payments for mortgage, auto, credit card and general loans. But on the positive side, they mean higher income from your savings accounts and money market funds.
“My view is that whatever price the world is putting on a soft landing is probably half that,” Dimon said, referring to the combination of lower inflation and resilient economic growth.
“I think the chances of something going wrong are greater than people think.”
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The author owns shares of JPMorgan.