'Wall Street Emperor' Dimon: "Financial and Geopolitical Risks Will Reverberate for 2 Years"

"If I Were the Government, Preparing What I Would Do"

"Very powerful forces will have repercussions in 2024 and 2025." Jamie Dimon, CEO of JP Morgan Chase, known as the 'Emperor of Wall Street,' expressed concerns about the persistent economic risks in the financial and geopolitical sectors.

[Image source= Xinhua News Agency]

On the 17th (local time), Dimon CEO gave an interview to CNBC in Davos, Switzerland, where the World Economic Forum (WEF) annual meeting is being held, saying, "If I were the government, I would prepare for what to do assuming the situation will not be good."

He questioned whether there is a clear understanding of how the Ukraine conflict, terrorism in Israel and the Red Sea, and quantitative tightening will work, warning that financial and geopolitical risks could interact complexly over the next two years.

The Russia-Ukraine war and quantitative tightening have been major variables that Dimon CEO had warned could become a 'hurricane' since the early stages of the Federal Reserve's tightening cycle. Recently, with rising geopolitical concerns from the Middle East, there are renewed fears that the supply chain shocks experienced during the pandemic could recur. This could drive up oil prices and transportation costs, potentially triggering another wave of global inflation.

In particular, Dimon CEO pointed out that the stock market rally confirmed at the end of last year may have diverted market attention away from these hidden economic risks. He said, "Assuming everything is going smoothly is a mistake," and added, "When stock prices rise, it feels like a drug that makes us all feel good." He also reminded, "Remember that massive fiscal and monetary stimulus was implemented," and stated, "I tend to be more cautious." Regarding Bitcoin investment, he reaffirmed his previously skeptical stance, saying, "The U.S. is a free country and you have the right to invest," but "I do not give personal advice."

Having met Ukrainian President Volodymyr Zelenskyy at the Davos Forum the day before, Dimon CEO attracted attention by wearing a Ukrainian flag pin on his suit lapel during the interview. Regarding the prolonged Russia-Ukraine war, he emphasized, "We need to teach the public that this is about freedom and democracy," and said, "This is why the war is happening."

On the same day, David Solomon, CEO of Goldman Sachs, pointed out in a CNBC interview held in Davos that early expectations for interest rate cuts in the financial market are excessive. Solomon CEO said, "There is no doubt that we have made progress on inflation. The possibility of rate cuts is reasonable," but added, "The market is getting ahead of itself." Predicting that the Fed will make rate decisions based on data, he noted, "A lot is happening in the world," and did not rule out the possibility that rising geopolitical risks from the Middle East could trigger an inflation shock. Klaas Knot, President of the Dutch Central Bank, also warned that the market is ahead of itself and that such expectations for rate cuts could lead to 'self-destruction.'