{"id":161432,"date":"2023-10-31T12:51:06","date_gmt":"2023-10-31T18:51:06","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=161432"},"modified":"2024-02-28T14:27:20","modified_gmt":"2024-02-28T21:27:20","slug":"chase-ceo-dimon-sounds-off-on-central-banks-at-summit","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/chase-ceo-dimon-sounds-off-on-central-banks-at-summit","title":{"rendered":"Chase CEO Jamie Dimon Slams Central Banks and the Fed\u2014Tells Investors To Be Cautious About 2024"},"content":{"rendered":"\n

JPMorgan Chase CEO Jamie Dimon called on central banks to exercise \u2018\u2019humility about financial forecasting\u2019\u2019 at the Future Investment Summit in Riyadh, Saudi Arabia, last week. The banking giant also slammed banks\u2019 recent track record of predicting economic outcomes as \u2018\u2019100% dead wrong.\u2019\u2019<\/span><\/p>\n\n\n\n

Jamie Dimon on Economic Policies, Macroeconomic Conditions <\/span><\/h2>\n\n\n\n

In his address to the summit, Dimon was staunchly critical of current U.S. economic policies, especially rapid increases in fiscal spending, which he referred to as higher \u2018\u2019than it\u2019s ever been in peacetime.\u2019\u2019 Dimon called the effectiveness of raising key stakes\u2014the most prominent economic policy of the past 18 months\u2014into question, given the rapidly swelling government debt. <\/span><\/p>\n\n\n\n

Said Dimon:<\/span><\/p>\n\n\n\n

\u2018\u2019There\u2019s this omnipotent feeling that central banks and governments can manage through all this stuff. I am cautious. I don\u2019t think it makes a piece of difference whether rates go up 25 basis points or more\u2014zero, none, nada.\u2019\u2019 <\/span><\/em><\/p>\n\n\n\n

Dimon also reiterated the concern he has already expressed on multiple occasions, \u2018\u2019whether the whole curve goes up 100 basis points,\u2019\u2019 urging institutions and investors at least \u2018\u2019be prepared for it,\u2019\u2019 although conceding that he couldn\u2019t know <\/span>whether further rate rises would happen<\/span><\/a>. <\/span><\/p>\n\n\n\n

These comments are in line with Dimon\u2019s warnings issued in the <\/span>JPMorgan Chase third-quarter report last week<\/span><\/a>. While acknowledging the bank\u2019s \u2018\u2019solid\u2019\u2019 Q3 results and stable outlook, he also stressed the continued economic and geopolitical uncertainty as something both consumers and financial institutions need to be aware of going into 2024. He identified several warning signs that \u2018\u2019this may be the most dangerous time the world has seen in decades.\u2019\u2019<\/span><\/p>\n\n\n\n

Dimon emphasized that the current combination of ineffective economic policies and broader factors, such as military conflicts in Ukraine and Israel, could result in \u2018\u2019a broad range of outcomes.\u2019\u2019 This warning echoes the worry the financier voiced at the Riyadh summit that the U.S. could be entering a 1970s-like era of economic stagnation. <\/span><\/p>\n\n\n\n

Calling for a sober view of the state of the economy, he pointed out that while <\/span>consumer<\/span><\/a> and business activity in the U.S. remained \u2018\u2019healthy,\u2019\u2019 it was increasingly being sustained by consumers \u2018\u2019spending out their excess cash buffers.\u201d Secondly, he reiterated his view that U.S. fiscal policies, including increased fiscal spending, were just not working to contain inflation, which would inevitably lead to further rate hikes. <\/span><\/p>\n\n\n\n

Related: <\/span><\/em><\/strong>Money is Broken in Our System and No One Has Control Over It Anymore<\/span><\/em><\/strong><\/a><\/p>\n\n\n\n

Another Voice of Criticism<\/span><\/h2>\n\n\n\n

Dimon is not the only one to criticize the Fed\u2019s interest rate-hiking frenzy as a delayed and ineffective measure that resulted from a misjudgment of rising inflation. Back in September, Nobel prize-winning economist Joseph Stiglitz characterized the Fed\u2019s insistence back in 2021 that the spike in inflation was \u2018\u2019transitory\u2019\u2019 as \u2018\u2019really bad economics\u2019\u2019 in <\/span>an interview with CNBC<\/span><\/a>. <\/span><\/p>\n\n\n\n

Stiglitz called out the Fed\u2019s failure to \u2018\u2019do their homework\u2019\u2019 as the real reason the U.S. is where it is in terms of inflation and sky-high interest rates. As Stiglitz explained, \u2018\u2019The Fed thought the source of the inflation that began in the post-pandemic era was excess demand.\u2019\u2019 <\/span><\/p>\n\n\n\n

All the while, other factors were driving inflation, such as the shortage of key components like semiconductor chips. The Fed failed to see the enormity of the impact of post-pandemic industry shortages on the economy. It didn\u2019t begin raising interest rates until March 2022. Since then, it has hiked rates 11 times, bringing them to a 22-year high as of October 2023.<\/span><\/p>\n\n\n\n

Is \u201cAmerica\u2019s Least-Hated Banker\u201d Right?<\/span><\/h2>\n\n\n\n

Dimon\u2019s assessment of the Fed\u2019s prediction ability as \u2018\u2019100% dead wrong\u2019\u2019 suddenly doesn\u2019t seem hyperbolic. Generally, his statements rightly carry considerable weight in the finance world. A titan of banking, he has been at the helm of JPMorgan Chase since 2005, making it the most successful U.S. bank in the process. Dimon is well known for his integrity and humble approach and was once referred to by <\/span>The New York Times<\/span><\/em> as \u201cAmerica’s least-hated banker.\u201d <\/span><\/p>\n\n\n\n

Under Dimon\u2019s leadership, Chase weathered the storm of the 2008 financial crisis better than most. He was a key figure in the rescue of the banking sector following the crash, buying out Bear Stearns and assets at Washington Mutual. <\/span><\/p>\n\n\n\n

In March 2023, he again played a key role in a major bank rescue operation following the <\/span>collapse of Silicon Valley Bank<\/span><\/a>. Most recently, Dimon attracted the attention of finance media by announcing that he will be selling 1 million shares of JPMorgan Chase beginning in 2024. <\/span><\/p>\n\n\n\n

JPMorgan Chase sought to reassure stakeholders that the selling of the shares was not a matter of concern. The regulatory filing states, “Mr. Dimon continues to believe the company’s prospects are very strong, and his stake in the company will remain very significant.” The bank further explained that the sale would be made for tax planning and wealth diversification purposes, a common practice in the financial sector.    <\/span><\/p>\n\n\n\n

Once again, by his own admittance, Dimon\u2019s predictions are not set-in-stone truths. In June, he issued similar warnings to investors to \u2018\u2019brace [themselves]\u201d against a \u2018\u2019hurricane\u2019\u2019 of unfavorable economic factors. However, so far, despite his entirely reasonable warnings, the \u2018\u2019hurricane\u2019\u2019 hasn\u2019t hit the U.S. economy yet. Real estate investors will have to wait to see how it plays out.<\/span><\/p>\n\n\n\n

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\n \n <\/div>\n <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

This renowned CEO sounded off on central banks and flimsy economic forecasts at a recent summit in Saudi Arabia. Here’s what they had to say.<\/p>\n","protected":false},"author":613618,"featured_media":161436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7383],"tags":[],"class_list":["post-161432","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/161432","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613618"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=161432"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/161432\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/161436"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=161432"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=161432"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=161432"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}