Jamie Dimon said at a Bernstein conference that an economic storm is on the way.
He said that the storm clouds were going to change and that the potential for an imminent economic recession requires preparation by banks.
The balance sheet of the bank should be ready for any economic shock.
You need to brace yourself. Dimon said that they are going to be very conservative with their balance sheet.
He gave lighter comments a few weeks ago that a storm could potentially clear up quickly. Last month, that earlier forecast helped boost investor optimism.
In his comments on Wednesday, he left room for differing degrees of impact from the economic storm.
It is kind of sunny right now. Things are going well. Everyone thinks the Fed can handle this. There is a storm coming our way. He said they don't know if it's a minor storm or a big one.
The stewardship of the largest bank in the country provides him with a real-time pulse on the health of both consumers and small businesses, which is something that Dimon is a meteorologist of sorts.
The Fed's quantitative tightening program is giving Dimon pause, aside from persistent inflation. The Fed is expected to roll off tens of billions of dollars worth of Treasury and mortgage-backed securities each month, and that includes interest rate hikes and a reduction of its $9 trillion balance sheet.
The Fed's balance sheet reduction program could lead to heightened market volatility as investors have been conditioned to expect ample Fed-driven liquidity since the depths of the financial crisis in 2008.
Preparing could help investors weather the economic storm that Dimon sees materializing.
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