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JPMorgan Chase chief government Jamie Dimon predicted the American financial system will in all probability tip right into a recession subsequent 12 months, warning the downturn threatened to spark “panic” in credit score markets and wipe an extra 20 per cent from the worth of US shares.
The feedback from Dimon, whose financial pronouncements are intently adopted by traders, adopted comparable remarks final month by billionaire investor Ken Griffin and level to a rising consensus amongst senior figures on Wall Road over the probability of a US recession.
In an interview with CNBC on Monday, Dimon listed rising rates of interest and Russia’s invasion of Ukraine as elements stoking the danger of a downturn in 2023.
“These are very, very severe issues, which I believe are prone to push the US and the world — I imply, Europe is already in recession — they usually’re prone to put the US in some form of recession six to 9 months from now,” Dimon was quoted as saying.
Dimon stated early indicators of misery had been evident within the monetary system, pointing to the depressed marketplace for preliminary public choices and high-yield debt offers, and predicted the ache would quickly unfold into different areas.
“The seemingly place you’re gonna see extra of a crack and perhaps somewhat bit extra of a panic is in credit score markets,” he stated.
In June, Dimon had warned of an financial “hurricane” and on Monday he once more inspired traders to be “very very cautious”. He added: “When you want cash, go elevate it.”
Requested the place he noticed the trough for the benchmark S&P 500 share index, which is already down greater than 20 per cent this 12 months, Dimon stated it could nonetheless “have a methods to go” and “could possibly be one other straightforward 20 per cent”.
“I believe the subsequent 20 per cent might be way more painful than the primary. Charges going up one other 100 foundation factors are much more painful than the primary 100 as a result of individuals aren’t used to it,” he stated.
JPMorgan, the most important US financial institution by belongings, will report earnings on Friday. Analysts are predicting JPMorgan in addition to the opposite giant US banks will put aside greater than $4bn to cowl potential losses from unhealthy loans in an indication of the rising pessimism across the US financial system.
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