JPMorgan’s Dimon warns of inflation, political polarization, wars creating risks not seen since World War II

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JPMorgan Chase CEO Jamie Dimon, the country’s most influential banker, told investors he expects the U.S. economy to be resilient and grow this year.

The comments came in an annual shareholder letter from Dimon, who often uses the letter to weigh in on broader topics such as politics, regulation and global events and what they could mean for JPMorgan Chase as well as the broader economy.

Dimon also used his letter to strongly defend the firm’s diversity and equity efforts, and push back at arguments from Republicans who have said such efforts at Fortune 500 companies, colleges and universities are discriminatory and a reflection of left-wing ideology. promote.

“America’s global leadership role is being challenged outside by other countries and inside by our polarized electorate,” Dimon said. “We need to overcome our differences and find ways to work in partnership with other Western countries in the name of democracy. “At this time of great crisis, it is paramount to unite to protect our essential freedoms, including free enterprise.”

Dimon had particular concerns about the continued large amounts of deficit spending by the US government and other countries, as well as the need for countries like the US to re-militarize and continue building green infrastructure, which has led investors to Inflation will remain high. expect.

Due to these issues, Dimon said he is less optimistic that the U.S. economy will achieve a “soft landing”, which he defined as a decline in inflation and interest rates as well as modest growth compared to the broader market. While he says investors are pricing in a “70% to 80%” chance of a soft landing, Dimon believes the likelihood of such an ideal outcome is “much lower” than that.

Also, at a time when some investors and economists are questioning whether the Federal Reserve can meet its forecast of three interest rate cuts this year, Dimon warned of the possibility of rates rising to 8% or higher. Gave. The Fed’s benchmark rate currently ranges between 5.25% to 5.50%.

“These significant and somewhat unprecedented forces cause us to remain vigilant,” he said.

“Ukraine needs our help immediately, but it is important to understand that the vast majority of the money the US is sending to Ukraine is to buy weapons and equipment, much of which will be made in the US. Our aid is not only helping Ukraine, but it’s going directly to American manufacturers, and it’s helping the country rebuild our military industrial capacity for the next generation.

Like many other CEOs, Dimon said he sees hope in artificial intelligence use cases. The bank has found 400 use cases for AI so far, Dimon said, particularly in the bank’s marketing, fraud and risk departments. The bank is also exploring the possibility of using AI in software development and general employee productivity schemes.

“We are absolutely convinced that the consequences (of AI) will be extraordinary and possibly as transformative as some of the major technological inventions of the last several hundred years: think of the printing press, the steam engine, electricity, computing, and the Internet, among others. ,

Of the 61-page letter, Dimon devoted four pages to the bank’s diversity and inclusion work. His vocal defense of the bank’s DEI initiatives comes at a time when shareholders and political activists have called such programs a waste of company resources. Dimon argued that JPMorgan – as the nation’s largest bank – should do as much as possible to help lift up all parts of the economy.

“We believe – and we’re not shy about this – that we have an obligation to help lift up the communities and countries in which we do business,” Dimon said. “We believe that doing so enhances business and the general economic well-being of those communities and countries and also enhances long-term shareholder value.”

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