On Monday, the CEO of one of the world’s largest banks said, Jamie Dimon from JPMorgan & Chase Co JPM made a bearish statement on the markets. In this market driven by news algorithms, statements like these will have a negative impact on the market.
This isn’t the first time Dimon has cast gloom and doom on the markets and proven wrong.
Of course, the timing and circumstances of his most recent prediction are very different, but it’s definitely worth revisiting. Hopefully for all investors, big and small, he’ll be wrong again.
‘That is serious’: During the interview with CNBC on Monday, Dimon stressed the precarious state of the US economy.
The US economy is “still basically doing fine,” Dimon said, acknowledging that the environment should not be compared to the 2008 global financial crisis that led to a global recession.
He expects a recession in the next six to nine months.
Dimon warned of continued volatility in the markets that could lead to a much deeper pullback. When asked about the potential downside from current levels, Dimon said the S&P 500 could fall “another easy 20%,” adding that “the next 20% would be a lot more painful than the first.”
Dimon On July 18, 2020: Amid the COVID-19 crisis, Dimon feared the worst. He expressed his concern by saying, “The word unprecedented is seldom used properly.”
At that point, Dimon said his bank had turned more pessimistic, seeing unemployment in its standard “baseline” scenario at nearly 11% by the end of 2020, 4.3% worse than the same forecast in April.
For a worst-case scenario, Dimon predicted another virus spike in the fall, leading to more lockdowns and unemployment rising to around 23%.
Fortunately, the virus was contained better than this prediction, helped by the Federal Reserve flooding markets with liquidity.
Why Dimon might be right this time: Circumstances are very different here…
