Jamie Dimon says ‘brace your self’ for an economic hurricane caused by the Fed and Ukraine war

JPMorgan Chase CEO Jamie Dimon says he’s getting ready the greatest U.S. financial institution for an economic hurricane on the horizon and suggested traders to do the identical.

“You know, I said there’s storm clouds but I’m going to change it… it’s a hurricane,” Dimon mentioned Wednesday at a monetary convention in New York. While situations appear “fine” at the second, no person is aware of if the hurricane is “a minor one or Superstorm Sandy,” he added.

“You better brace yourself,” Dimon instructed the roomful of analysts and traders. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”

There are two principal components that has Dimon frightened: First, the Federal Reserve has signalled it can reverse its emergency bond shopping for applications and shrink its stability sheet. The so-called quantitative tightening, or QT, is scheduled to start this month and will ramp as much as $95 billion a month in lowered bond holdings.

“We’ve never had QT like this, so you’re looking at something you could be writing history books on for 50 years,” Dimon mentioned, including that “a lot” about quantitative easing applications “backfired.”

Central banks “don’t have a choice because there’s too much liquidity in the system,” Dimon mentioned. “They have to remove some of the liquidity to stop the speculation, reduce home prices and stuff like that.”

The different giant issue worrying Dimon is the Ukraine war and its influence on commodities, together with meals and gasoline. Oil “almost has to go up in price” due to disruptions caused by the worst European battle since World War II, probably hitting $150 or $175 a barrel, Dimon mentioned.

“Wars go bad, [they] go South in unintended consequences,” Dimon mentioned. “We’re not taking the proper actions to protect Europe from what’s going to happen to oil in the short run.”

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