JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon expressed concerns about the current geopolitical climate, marking it as potentially the most perilous since World War II.
In his annual letter to shareholders, Dimon refrained from reiterating his past concerns about high debt levels and the effects of quantitative tightening, focusing instead on the broad and unprecedented impacts of current geopolitical and economic forces.
“These significant and somewhat unprecedented forces cause us to remain cautious,” Dimon wrote.
Dimon stressed the uncertainty surrounding these forces, noting they could unravel over years and their outcomes are nearly impossible to forecast within a one-year span. He emphasized the importance of being prepared for a range of potential outcomes rather than relying solely on base case forecasts.
Amid ongoing concerns about persistent inflationary pressures, Dimon highlighted several factors that could continue to drive inflation, including fiscal spending, remilitarization, global trade restructuring, and the capital needs of the green economy.
“There is also a growing need for increased spending as we continue transitioning to a greener economy, restructuring global supply chains, boosting military expenditure and battling rising healthcare costs. This may lead to stickier inflation and higher rates than markets expect,” Dimon said in his letter.
He drew parallels to the inflationary period of the 1970s and early 1980s, but noted the unique circumstances of today’s fiscal deficits and the unprecedented scale of quantitative easing and its reversal.
On the topic of artificial intelligence (AI), Dimon acknowledged the risks associated with its advancement. He assured that JPMorgan maintains a robust risk and control framework to manage AI-related risks and stay ahead of regulatory changes.
He also noted the efforts to maintain the highest ethical standards and transparency in how AI influences decision-making processes. Dimon warned of bad actors using AI for malicious purposes but assured that the bank uses AI to counter such threats and protect the company’s systems and intellectual property.