JPMorgan’s Jamie Dimon: U.S. to face recession in 6-9 months, markets could become disorderly

(Kitco News) The U.S. economy could be in a recession by the middle of next year, warned JPMorgan Chase & Co chief executive Jamie Dimon, adding that markets could become disorderly and the S&P 500 is at risk of falling another 20%.

The situation is dire, with problematic inflation, oversized rate hikes, unknown effects from the Federal Reserve’s quantitative tightening, and the war in Ukraine acting as primary triggers for a recession.

“These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now,” Dimon told CNBC Monday.

Dimon added that the S&P 500 could fall by “another easy 20%” from the current levels. And the next 20% drop is likely to “be much more painful than the first,” he noted. “Rates going up another 100bps will be a lot more painful than the first 100 because people aren’t used to it,” Dimon said.

The type of recession the U.S. is likely to see ranges from something very mild to quite hard. And a lot depends on what happens with the war in Ukraine, Dimon explained.

“To guess is hard, be prepared. One guarantee is volatile markets. You are going to have volatile markets. You’ve already seen markets down quite a bit, which is typical but still [has] been orderly. It’s possible to see it be disorderly sometime in not too near future,” he said.

On the Fed, Dimon said that the U.S. central bank waited too long and did too little, with QT starting too late. But the Fed is motivated to catch up now, he added. “And, you know, from here, let’s all wish him success and keep our fingers crossed that they managed to slow down the economy enough so that whatever it is, is mild — and it is possible,” Dimon said.

Dimon’s comments come as markets adjust to rising rate hike expectations amid fears of an economic recession.

Last week, the United Nations urged the Federal Reserve and other central banks to ease up on rate hikes, warning that tighter monetary policies are pushing the global economy into a recession.

“There’s still time to step back from the edge of recession,” UNCTAD Secretary-General Rebeca Grynspan said. “But the current course of action is hurting the most vulnerable, especially in developing countries and risks tipping the world into a global recession.”

The Federal Reserve raised rates by 300 basis points the year to the current range of 3% to 3.25%. Meanwhile, the European Central Bank hiked 125 bps, and the Bank of Canada raised by 300 bps.

For a breakdown and analysis of how central bank interest rates changed in 2022, click here. 

What’s ahead? More rate hikes vs. global monetary policy pivot: here’s a look at global rate hikes in 2022 | #kitconews #gold #silver #finance #preciousmetals #markets #mining #investing | https://t.co/tUiIJs9pug pic.twitter.com/bXqLYFQKm2

— Kitco NEWS (@KitcoNewsNOW) October 9, 2022

At the beginning of June, Dimon also told investors to brace for an economic “hurricane.”

“You know, I said there’s storm clouds, but I’m going to change it … it’s a hurricane,” CNBC quoted Dimon as saying at a financial conference in New York. “You’d better brace yourself … JPMorgan is bracing ourselves, and we’re going to be very conservative with our balance sheet.”