(The Economic Times) - Jamie Dimon, the chairman, and chief executive of JPMorgan Chase JPM, drew everybody's focus when he cautioned of an impending economic storm caused by rate hikes, the Ukraine crisis, and inflation.
Dimon urged people to prepare for the impending crisis. Dimon told the audience of analysts and investors that JPMorgan is bracing itself to be pretty cautious with its financial statements.
Dimon is concerned about two major factors. The Federal Reserve has indicated that it will reduce its balance sheet and reverse its urgent bond-buying operations. QT, or so-called quantitative tightening, is slated to start this month and will eventually lower bond holdings by $95 billion every month.
Brian Moynihan's view on Jamie Dimon's economic slowdown
Bank of America Chairman and CEO Brian Moynihan used the same venue, the Bernstein Strategic Selections Convention, where Dimon had delivered his weather-related pessimism.
Moynihan reacted with a lengthy remark, suggesting that the Fed has difficulties raising rates due to a solid fundamental economy. Low unemployment, moderate wage growth, and strong consumer spending, according to Moynihan, are the excellent factors that are making the Fed's job difficult right now.
The consumer's leverage, according to Moynihan, is in excellent health. Even though the stimulus program ended in March last year, our customers' Bank of America accounts' balances have increased every month since June or July. Their credit card balances have dropped from $100 billion to $80 billion when it comes to borrowing power. That means the same clients can borrow money again because they are creditworthy.
Moynihan on recent pressure on bank stocks
John McDonald, an autonomous research analyst, questioned Moynihan about the recent pressure on bank stocks. McDonald elaborated by stating how JPMorgan and Bank of America have lost 18% of their value this year. Investors in the sector have been waiting for interest rates to increase, which would improve margins, for over a decade. Now that they have, the party appears to be over before it even began.
Moynihan claimed that he understands the fear of a crisis since he believes credit prices would rise. Investors may be apprehensive about poor results, but there is none.
June 1, 2022
Disclaimer: This content is authored by an external agency. The views expressed here are that of the respective authors/ entities and do not represent the views of Economic Times (ET). ET does not guarantee, vouch for or endorse any of its contents nor is responsible for them in any manner whatsoever. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified. ET hereby disclaims any and all warranties, express or implied, relating to the report and any content therein.
