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Jamie Dimon: ‘Cold War is back’ and commodity turmoil could get ‘much worse’

By on May 5, 2022 0

As the old saying goes, hindsight is 20/20. This is especially true for financial markets and the Federal Reserve. So while investors wait to see if the Fed will signal the possibility of a 75 basis point rate hike at its next meeting, JPM CEO Jamie Dimon tells Bloomberg (and his audience) that investors should take a deep breath and trust the Fed, while acknowledging that there is “a chance” of a policy error that could trigger a punishing recession.

On that front, Dimon said Bloomberg during a recent interview that the Fed should have acted more quickly to raise interest rates as inflation rocks the global economy. His comments echoed those made by Ken Griffin during his recent appearance at the Milken conference in Los Angeles.PMorgan’s Dimon says Libra was a “good idea” that will never happen

“We are a bit late” said Dimon. “The sooner they move, the better.”

He added that “we have a very strong US economy” and that “businesses are in very good shape.” While the Fed is “a bit late,” Dimon said “the sooner they move, the better.”

“If they can, they’ll have to slow the economy down enough that 8% will start falling over time,” said Dimon.

Although Dimon has said he’s not a “bettor”, he thinks there’s about a third chance of a “soft landing” and a third chance of the Fed sending the US economy in a “mild recession” – although there is a chance that a recession could be “much harder than that”.

When asked if he was afraid of a policy mistake by the Fed, Dimon insisted that he was “not afraid of the Fed”, before launching into a rant about the importance of a “rational and thoughtful” budgetary policy (something he has been preaching for years).

Along with a 50 basis point hike at the close of its latest policy meeting on Wednesday, the central bank is widely expected to announce the start of its balance sheet reduction.

But before investors get too critical, Dimon said they should “take a deep breath” and give the Fed a chance.

But an even bigger risk than the Fed’s rate hike plans is war in Ukraine, which could take years to unfold.

“Global energy is precarious”, he said. “If oil hits $185, that’s a huge problem for people and we should do everything we can today. We need to pump more oil and gas.”

He said the US government should focus more on national security, including its energy and food resources.

“The cold war is back” Dimon said, who was talking about the bank’s 2022 CEO Forum. “National security is always the most important thing.”

But the interview with BBG wasn’t Dimon’s only interview on Wednesday. He also gave an interview to irish weatherwhich focused more on the war in Ukraine and its impact on international commodity markets (notably energy).

Related: Europe could lose the race for the energy transition before it really begins

“And then you have Ukraine. First and foremost, our thoughts are with the people of Ukraine because of the humanitarian crisis. But this is a war and we don’t know how it will end. It could get worse. Sanctions It could get worse. It’s causing complete upheaval in commodity markets around the world and it could get worse. That’s what we have to be prepared for.”

He added that the turmoil in international commodity markets could worsen “much more” if the war in Ukraine drags on. For this reason, Dimon said that “global energy is precarious” and added that “if oil hits $185, that’s a huge problem for people and we should do everything we can today. We need to pump more oil and gas.”

Meanwhile, in addition to warning of the global risks posed by the war in Ukraine, Dimon also said that “the Cold War is back” and that “national security is still the most important thing”.

By Zerohedge.com

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