JP Morgan are bracing themselves.

Investment Banker Jamie Dimon says ‘brace yourself for an economic hurricane caused by the Fed and Ukraine war

Jamie Dimon says that an economic hurricane is coming and that JPMorgan they are bracing themselves and will be very conservative about its balance sheet including personal loans and business lines of credit. Inflation, which has been increased by supply chain disruptions and the coronavirus pandemic, has generated the fear that the economy will go into recession as it combats price increases. Even though things are good right now, Dimon is not as optimistic and asks us to prepare for it.

He is worried mainly about two things. One is the fact that the Federal Reserve will reverse its emergency bond-buying programs and sell assets of the company. This quantitative tightening will begin this month and will ramp up to $95 billion a month in reduced bond holdings.

Dimon says that a quantitative tightening like this has never happened and that several aspects of quantitative easing programs backfired and were considered a huge mistake. He explains that banks have to another choice than to reduce home prices and stuff like that to reduce speculation.

The other thing worrying Dimon is the impact of the Ukraine war on commodities. Oil has to go up in price hitting $150 or $175 a barrel. He says that proper actions to protect Europe from this problem with oil had not been taken.

He has also referred to these concerns as things that can actually dissipate. Nevertheless, they have seemed to deepen. During the 2008 financial crisis central banks, commercial banks, and foreign exchange trading firms were the three major buyers of U.S Treasurys, but they might not have the capacity to the same this time.

He says that he doesn’t know the effect of the change in the flow of funds, but he is prepared for huge volatility. He advises banks to push clients to move “non-operating deposits” into other places, such as money market funds. This could help banks to absorb a surge in bad loans and be able to help clients in bad times. The best protection for a downturn is a “fortress balance sheet” and conservative accounting.

He says that some critics conflate stakeholder capitalism for being “woke”. He defined himself as a red-blooded, free-market capitalist and not woke. All he if doing is caring about their clients. They serve them, earn their respect, and earn their business.