“Right now, it’s kinda sunny, things are doin’ fine,” Jamie Dimon mused, gesticulating at a conference sponsored by AllianceBernstein. “Everyone thinks the Fed can handle this.”
Then, he took a turn for the dramatic. “That hurricane is right out there, down the road, coming our way,” he said, emphatically. “We just don’t know if it’s a minor one or Superstorm Sandy.”
He paused to scratch his nose, casually, as though he hadn’t just employed a natural disaster metaphor to conjure economic oblivion. “Or — yeah, Sandy. Or Andrew. Or something like that.”
Let’s dispense with the obvious, because I feel like it’s obligatory. And also because it’s funny. Hurricanes aren’t generally “right out there, down the road.” They’re “out there,” at sea. You don’t drive down a “kinda sunny” highway and run into a hurricane.
Dimon’s warning felt a bit overwrought, but it wasn’t a non sequitur. He was attempting to extend an analogy he used during the bank’s first investor day since the pandemic. During that event, he cited “storm clouds” for the US economy. “You know, I said there’s storm clouds but I’m going to change it … it’s a hurricane,” he clarified, on Wednesday.
Almost without exception, the financial media spun Dimon’s investor day comments as constructive. On May 23, he said the clouds might “dissipate.”
At the time, I contrasted Dimon’s assessment with decidedly cautious comments from Snap, whose guidedown sparked a 43% one-day selloff in the shares. “Far be it from me to suggest Snap has a better read on the outlook for the economy than Jamie Dimon, but I’ll admit CEO Evan Spiegel’s staff memo, made public as the company slashed revenue and profit guidance, sounded more in touch than Dimon’s somewhat nebulous ‘strong economy, big storm clouds’ characterization,” I wrote, a mere nine days ago.
On Wednesday, Dimon sounded less like an optimistic weatherman and more like Spiegel who, in a memo to employees, cited “rising inflation and interest rates, supply chain shortages and labor disruptions, the impact of the war in Ukraine, and more” in the course of explaining the company’s cautious guidance, as conveyed in an 8-K.
Dimon talked about the Fed’s efforts to run down its $9 trillion balance sheet: “We’ve never had QT like this, so you’re looking at something you could be writing history books on for 50 years.” And the war: “Wars go bad. [They have] unintended consequences.” What he is: “I’m a red-blooded, free market capitalist.” And what he isn’t: “I’m not woke.”
As for the highway hurricane, Dimon offered some advice. “You’d better brace yourself,” he said. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”
No Bruno Iksils here, folks. This, at least, may not be a “tempest in a teapot.”
After the GFC, I can only see Dimon as the richest welfare King in the world.
So do I listen to Kolanovic or Dimon? Or neither?
Dimon is covering his ass — just in case the hurricane hits — and Kolanovic, as usual, is bullish (with small detours to bearishness). Quite a pair at JPM.
Dimon has seen more than Kolanovic relative to history. Additionally, if one of the largest banks in the world (JPM) is considering tightening the reins at the same time as the Fed is essentially doing the same (and it is the banks the generate new dollars via lending) then I have to give more weight to Dimon’s fears as compared to Kolanovic’s buoyancy.
I think I will stay fully hedged. Something to do with sleep.
I was going to ask the same question. Marko has been very prescient over the past few years, though.
This sounds like populism to me. Bad stuff is gonna happen, I called it, pay attention to me!