Markets are underestimating the risks, says Jamie Dimon, CEO of JPMorgan Chase

JPMorgan Chase CEO Jamie Dimon said investors were underestimating the risks facing the global economy and that he would not buy stocks or long-term US Treasuries at their current prices.

In an hour-long interview with Wilfred Frost released late Monday, Dimon said markets were not fully taking into account a growing list of geopolitical and financial threats.

“I think these risks are probably greater than others think,” Dimon said, referring to the wars in Ukraine and the Middle East, tensions between the United States and China, and rising military spending at a time of growing government deficits.

Asked whether markets were underestimating the chance of a major shock, Dimon said it was difficult to know exactly what risks were actually reflected in asset prices.

“It is possible that there is something hidden, but what is not understood is what is really happening,” he said.

Dimon, who leads the world’s largest bank by market value, often warns the public of the economic risks he sees.

His latest comments contrast with investors’ recent willingness to look beyond wars, tariffs and other shocks. the Standard & Poor’s 500 It has returned nearly 10% this year as consumers continue to spend, inflation moderates and investors embrace AI trading.

last week, JPMorgan Chase Its peers posted impressive quarterly results supported by rising trading and investment banking revenues, reinforcing the view that the US economy has weathered the recent geopolitical turmoil better than many expected.

Dimon acknowledged in the interview with “The Master Investor Podcast” that the global economy has become more resilient due to lower energy dependence compared to previous decades, but he warned that this does not eliminate the possibility of a sudden inflection point.

“You may need more straw on the camel’s back to cause this tipping point,” he said. “Even this current war starting again, that might not be enough to do that.”

Dimon said persistent US budget deficits will eventually force a reckoning, which could lead to higher interest rates.

“My view is that it will become a problem,” he said, predicting interest rates would rise as so-called bond vigilantes demand greater compensation to finance government debt.

When asked, Dimon said he would not buy long-term Treasuries: “Personally, no.”

Even if inflation falls to the Fed’s 2% target, 10-year bonds will likely be at 4% to 4.5%, he said, adding that he sees little uptick in Treasury prices.

He was similarly cautious about stocks. While he would consider buying individual stocks if it was a “large investment,” Dimon said he wouldn’t be a buyer of the broader market at current valuations.

Damon also spoke in a measured tone about artificial intelligence, comparing today’s spending boom to the early days of the Internet.

“The amount of money being spent is huge,” Damon said. “Will it all pay off? Maybe, just like the Internet did.”

He also noted that during that Internet boom, early big companies like Yahoo and Netscape faded away while eventual winners like Google and Facebook It appeared later.

“Will it pay off in the way you expect and on the timeline you expect? Absolutely not,” Damon said.