According to CNBC, JPMorgan Chase CEO Jamie Dimon said investors are underestimating risks to the global economy and that he would not buy equities or long-dated U.S. Treasurys at current prices. In an hourlong interview released late Monday, Dimon said markets are not fully pricing in geopolitical and fiscal threats, including the wars in Ukraine and the Middle East, tensions between the U.S. and China, and rising military spending alongside widening government deficits.
Dimon said it is difficult to know exactly what risks are already reflected in asset prices, but added that what is not priced in is what actually happens. He said the global economy has become more resilient because it is less dependent on energy than in previous decades, but warned that this does not rule out a sudden turning point. Dimon also said persistent U.S. budget deficits will eventually become a problem and could push interest rates higher as bond investors demand more compensation to finance government debt.
Asked about Treasurys, Dimon said he would not personally buy long-dated bonds and said the 10-year Treasury yield should probably be at 4% to 4.5% even if inflation returns to the Federal Reserve's 2% target. He was similarly cautious on stocks, saying he would consider an individual stock only if it were a great investment, but would not buy the broader market at current valuations. On artificial intelligence, Dimon compared the current spending boom to the early internet era and said the money being spent is likely to pay off over time, though not on the timetable investors expect.