Jamie Dimon, CEO of JP Morgan, told CNBC on Monday that a recession is likely to hit the US economy over the next six to nine months.
He thinks the stock market will fall another 20% from current levels, putting the S&P 500 at 2,900.
If the economy sees a soft or hard landing, it could be another easy 20% and I think the next 20% will be more painful than the first. Year-to-date, the S&P 500 has fallen 25% as investors wrestle with elevated inflation and rising interest rates.
US consumers and most companies are in great shape from a balance sheet perspective, so that could be sending mixed messages to investors.
The US economy is doing well currently. Consumers are spending more money and their balance sheets are in good shape. Debts went up a little, but not as much as before. Even if we go into a recession, they'll be in better shape than they were in 2008. Credit is very good and companies are in good shape.
He said that you can't talk about the economy without discussing the future.
The Fed's reduction of its $9 trillion balance sheet is something that Dimon is worried about. The war between Russia and Ukraine poses a great risk.
The war is going on. The US is likely to be in a recession six to nine months from now.
The markets have been orderly in recent months, but early signs of distress can quickly build up.
This is normal. The markets are going down. The IPO market closed first. Structured credit and high yield close together. For the majority of the time, that happened. It affects other credit. There's a lack of liquidity in a lot of markets.
According to the bank CEO, the system is likely to have cracks in it.
It could be a country, it could be an exchange traded fund. I'd be very careful. If you need money, raise it.
If the Fed makes the right decisions and consumers remain strong, he left room for a soft landing.
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