CEO Jaime Dimons words on stocks economy raises eyebrows.jpeg
There was a lot of chaos this year, which means eye fluctuations to markets, including stocks, bonds and currencies.
The past two years have been relatively tame compared to this year. The S&P 500 achieved successive gains above 20 % in 2023 and 2024, including a strong return of 24 % last year. This year, breast inflation, supply of jobs, and continuous dates on customs tariffs were created uncertainty that took the stock market on a trip on the rotating ship.
Certainly fears were growing to 2025. The job market has already weakened enough to cause federal reserves to reduce interest rates at the end of 2024, and the progress of inflation was slowing, providing little assistance to consumers with financial hardship.
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Moreover, apparently optimism apparently growth in the endlessness of the fading artificial intelligence, which led to anxiety whether the massive running in stocks over the past two years have made evaluations to non -sustainable levels.
In short, the background was already worrying before President Donald Trump took a heavy hammer for global trade, as it unveiled a series of harsh definitions expected on the main trading partners, including China.
Related: Secretary BESSENT sends a message to increase the prices of Walmart due to the customs tariff
The result, even all this chaos, led to markets.
The S&P 500 collapsed from mid -February to early April, as it decreased by approximately 20 %, only shy of the bear market. After that, a tariff began in the form of President Trump, which stopped most of the mutual tariffs on April 9 in a large gathering that wiped out many S&P 500 losses.
Now, however, anxiety returns after MOODY decision to reduce the credit rating of the United States amid a new draft law on spending and taxes that make its way through congress that would cause deficit to be enlarged.
The bond market has seen an increase in returns, and signs may indicate that investors are still very satisfied. This point does not waste the CEO of JP Morgan Jimmy Damon.
Damon is among the most influential executives in America. It leads the largest bank in the United States and the fifth largest in the world, a role that puts its finger directly on the pulse of the economy.
Jimmy Damon, CEO of JPMorgan Chase, has sharp words about economics, stocks and credit market. Bloomberg & Sol; Getty Images “Loading =” Eager “height =” 640 “width =” 960 “Class =” Yf-1VR77wf Loader “/>
Jimmy Damon, CEO of JPMorgan Chase, has sharp words about economics, stocks and credit market.Bloomberg and Sol; Getty Images
At alleged “normal” times, the economy stopped jumping due to the federal reserve’s monetary policy.
The Federal Reserve has been assigned a double mandate to ensure low unemployment and inflation. When the economy wanders, interest rates can decrease, increase economic activity and enhance jobs. When the temperature rises, it can raise interest rates, reduce economic activity and reduce inflation.
Related: The veteran fund manager sends a difficult message about the interest price policy in the Federal Reserve
It seems simpler than it is. Especially this year.
The Federal Reserve is currently caught in a pickle between its goals. While unemployment has risen to 4.2 % of 3.4 % in 2023, indicating that rates should be reduced, inflation has proven sticky and can restore the nature in the wake of definitions, indicating raising rates.
In March, there were 901,000 non -vacant jobs in the United States, according to the job lightening and work circulation, or tremors. Meanwhile, more than 600,000 workers were demobilized this year until April, an increase of 87 % on an annual basis, according to Challenger, Gray, and Christmas.
The Personal Consumption Expenditure Index showed that inflation was 2.3 % in March, higher than 2.1 % recorded last September. The primary index, which excludes energy and flying food, was 2.6 % in March, is higher than the target of inflation by 2 % of the Federal Reserve.
If the federal reserve rates are reduced, it risks an increase in inflation as in 2022, and if raising rates, the American economy may be sent in stagnation.
The dynamic increased the possibility of stagnation, a period of high inflation and economic weakness.
Hope is for the most calm heads to prevail during commercial conversations, which leads to a more manageable tariff that will not pressure inflation as much. This optimism got a batch when the trade war with China was apparently exploding last month, as the United States reduced customs duties from 145 % to 30 %.
Related: The stock market decreased after an uncommon event
However, even if the definitions eventually decrease, they seem to be here to survive, and even in low tariff rates, will represent the largest new tax on consumers for decades.
This point was strengthened this week when Donald Trump renewed his commitment to definitions, indicating 50 % of the United States’ slap over the European Union due to a lack of progress in commercial talks.
The ongoing commercial battle over the financial markets, given the extent of companies spread across countries. For example, most retailers make a large percentage of their commodities from low -cost production countries in Asia, and according to the White House, only 25 % of the car content can be named on cars bought by the Americans “Made in America”.
There is also the fact that the United States’ appetite for spending has been partially supported by commercial imbalances, as countries like China and Japan have many growing debt heap.
The inability to control spending is behind the reduction of MOODY debt from the debts of the United States, as it is clear in the “Great Big Bill” that is discussed in Washington this month. The draft law, which reduces tax revenues, can add $ 3.3 trillion to a 10 -year deficit, according to the tax establishment.
Damon worries that people are satisfied with the risks facing the American economy.
More economic analysis:
“The market has decreased by 10 %, which is 10 % reserves,” said Damon.
Damon believes that the credit market is much more dangerous than people are aware, saying: “I am not a credit buyer today … today’s credit is a bad risk … people who have not passed through a large shrinkage lacking point about what can happen in the credit.”
He also believes that there can be a major reset in corporate profits this year due to the customs tariff and bad news of stocks, given that the profit growth is the cornerstone of the stock market assessing.
He called the definitions that are still a “very extreme” list and warned that “the opportunity to inflation in height and stagnation is slightly higher than others believe.”
Dimon was not completely discovered, though. He pointed out that the shrinkage creates opportunities for the companies that are ready to benefit from, including JP Morgan.
“Good companies benefit from shrinkage,” Damon said. “Earn your lines with your customers in a slower condition.
Taking the explicit Damon is simple: the current situation “create a lot of risks there. I don’t think we can predict the result.” This is not very reassuring.
Related: The Veteran Fund Director reveals the prediction of the S&P 500
The words of the CEO Jaime Dimon about the stocks, and the economy raised the eyebrows for the first time on Thestreet on May 25, 2025
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