US futures slide as bank earnings fail to thrill

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  Fri, January 12, 2024 at 6:18 AM MST

  Jamie Dimon again warns on ‘stickier’ inflation, higher interest rates

  JPMorgan (JPM) reported fourth quarter results early Friday that capped a record year for the country’s largest bank.

  And inside the firm’s fourth quarter release, investors got another expansive view on the US and global economy from its outspoken CEO, Jamie Dimon.

  Largely reiterating his view that investors are too complacent with the idea inflation is on a smooth path back to the Federal Reserve’s 2% target and interest rates will remain higher than forecasters expect, Dimon said a host of “unprecedented” factors in markets means the bank “must be prepared for any environment.”

  Here are Dimon’s comments in full, with our emphasis and spacing added:

  The U.S. economy continues to be resilient, with consumers still spending, and markets currently expect a soft landing. It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus.

  There is also an ongoing need for increased spending due to the green economy, the restructuring of global supply chains, higher military spending and rising healthcare costs. This may lead inflation to be stickier and rates to be higher than markets expect. On top of this, there are a number of downside risks to watch.

  Quantitative tightening is draining over $900 billion of liquidity from the system annually, and we have never seen a full cycle of tightening. And the ongoing wars in Ukraine and the Middle East have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost. These significant and somewhat unprecedented forces cause us to remain cautious. While we hope for the best, the past year demonstrated why we must be prepared for any environment.