Ukraine war in focus: further stock sell-off ahead? – JPMorgan boss warns of global recession | news
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• Jamie Dimon thinks US recession is likely
• The outcome of the Ukraine war is of crucial importance
• Wall Street could face another painful sell-off
The effects of the Ukraine war, as well as strong demand and global supply chain problems in the wake of the Corona crisis, have at times pushed inflation in the US to its highest level in over 40 years. As a result, the US Federal Reserve initiated a turnaround in interest rates and raised its key interest rate in several large steps to between 3.00 and 3.25 percent. A similar development can be observed in many other regions of the world, even if the European Central Bank, for example, is much more hesitant with its rate hikes.
For monetary authorities, this tightening is the monetary policy This is a balancing act, however, because while higher interest rates help curb inflation, they can also slow down economic growth. As a result, many market participants are now fearing a recession. Nonetheless, Fed Chair Jerome Powell has given a clear signal that he is prepared to continue raising interest rates to fight inflation, even if it leads to an economic recession. But other central banks, such as the ECB and the Bank of England, also announced their willingness to raise interest rates further.
Jamie Dimon predicts recession
Given the numerous economic headwinds, Jamie Dimon, CEO and Chairman of JPMorgan, fears that the US as well as the global economy will slip into recession by the middle of next year. While the US economy is still doing well right now, “you can’t talk about the economy without talking about things going forward, and those are serious things,” Dimon told CNBC.
The head of the largest US bank is particularly worried about escalating inflation, the hawkish monetary policy and the Ukraine war. “These are very, very serious things that I think are probably weighing on the US and the world – I mean Europe is already in recession – and they’re likely to put the US into some kind of recession in the next six to nine months ” said Dimon.
However, according to the respected banker, it is not foreseeable how severe this recession will be. “It can range from very mild to quite severe and a lot will depend on how the war unfolds. I think this is difficult to predict, so I advise being prepared for anything.”
price slide in the stock market
One thing the JPMorgan CEO is sure of, though, is that investors need to brace themselves for volatile markets. This could also result in a disorganized financial situation, Dimon warned.
The banker believes it is quite possible that the S&P500, which reflects the broad US stock market, could “slightly lose another 20 percent”. “The next 20 percent would be a lot more painful than the first,” he cautioned.
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