JP Morgan CEO Jamie Dimon sent shockwaves through markets and C-suites on Wednesday in a free-wheeling interview at an investment banking conference.
Speaking at a conference sponsored by AllianceBernstein Holdings, Dimon said that the U.S. economy is facing a “hurricane” as the Federal Reserve continues its process of normalizing interest rates.
“Right now, it’s kind of sunny, things are doing fine,” Dimon told the conference. “Everyone thinks the Fed can handle this. That hurricane is right out there down the road, coming our way. We just don’t know if it’s a minor one or Superstorm Sandy… or Andrew or something like that. And you got to brace yourself.”
Yahoo Finance recently spoke with a few CEOs at the World Economic Forum and on Yahoo Finance Live. Here is what they told us about their perspective on the direction of the economy.
“The American consumer is very strong, so that presents a challenge for the Fed — but it’s also a good thing to be working against,” Moynihan said, adding that the consumer’s “leverage is in great shape. Even though stimulus stopped in March of last year, the account balances of our customers at Bank of America have gone up every month since last June or July. If you think about their ability to borrow, their credit card balances are still down from $100 billion to $80 billion. That means the same customers can go back and borrow the money, they are highly creditworthy.”
“What we are seeing today continues to be very strong demand from the commercial side,” Lores said. “As we were expecting, we saw some slowdown in consumer. But nothing that tells us it’s going to be a major slowdown coming forward.”
“I relate to the IT side of this,” Neri said. “And I have to say demand continues to be strong around connectivity, around the AI, machine learning, about the fact that customers want to consume as a service. Our strategy is very well aligned for that.”
“I don’t want to see us talk ourselves into a recession, first of all, and I think people are a little too pessimistic,” Robbins said. “If you go back over the last several years, the challenges we have dealt with as a global society, we should have confidence we are going to deal with whatever comes our way. Whatever happens will likely be short-lived.”
“Cloudflare is 12 years old, and we haven’t had a true recession in the period we have existed as a company,” Prince said. “We are probably long overdue for that. The first quarter of 2022 across the entire tech sector was one of the toughest quarters any businesses have seen since the first quarter of 2020 at the start of the pandemic. I don’t think we are going to bounce back as fast as we did with COVID. For us, that is actually not a bad thing as we provide our services in our very economical way. We tend to save businesses money, cut other vendors and simplify things.”
Prince later added: “Across the world, budgets are getting tighter.”
“I think there is a slowing,” Gelsinger said. “People are fighting inflation. There is going to be a tightening of monetary policy as well. I think these are all natural. Clearly we have Shanghai port shutdowns. Europe is trying to figure out what it looks like with the Ukraine situation. So I think there is a general softening and general tightening of policy. We think that is probably a couple of quarters in front of us.”
“I think all of us would admit that we don’t know what it [the current macro environment] feels like,” Rosensweig said. “We had the pandemic. Then we had back to work. Then we didn’t have back to work. Then we have inflation and wage inflation. Then we have a war. I think anybody that is trying to predict things based on old barometers will get it wrong. I do think the consumer is going to slow down, but I just don’t know by how much or for how long. I do think we are experiencing it already. As costs go up for businesses and consumers, they will have to spend less. I just hope it doesn’t reach stagflation.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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Source: https://finance.yahoo.com/news/jamie-dimon-warning-ceos-100101395.html