JPMorgan Chase, the largest bank in the United States, held its investor day event on Monday, where CEO Jamie Dimon answered questions from analysts and journalists. Regardless of market expectations of a price hike pause, Dimon cautioned that people “should be prepared for prices going higher from here.” The billionaire banker likewise discussed the capacity for commercial real estate to sour following concerns raised by Berkshire Hathaway’s Charlie Munger about the sector.
JPMorgan’s Jamie Dimon Discusses Souring Commercial Real Estate Sector
This coming week Jamie Dimon, the CEO and chairman of JPMorgan Chase, along with some of his colleagues, discussed the state of the United States economy during the bank’s investor day event. Reports by JPMorgan, the economy is “doing fine,” but a “mild recession” is still expected. According to Charlie Munger’s warning to the Financial Times, Dimon expressed concern about commercial real estate, which could pose challenges for banks in the future.
Dimon stated, “ There is always an off-sides — The off-sides in this case will probably be real estate. It’ll be certain locations, certain office properties, certain construction loans. It can potentially be very isolated; it will not every bank.”
A ‘Very Normal’ Credit Crunch
The multinational financing bank further announced that it still expects to earn $84 Billion in net interest revenue. The bank is likewise making a big bet on artificial intelligence (AI). Reports by Bloomberg, the bank has already seen $1 Billion “in business value” from its Artificial Intelligence (AI) investments. Regardless of the profits, Dimon still expects a broad credit crunch, which he considers “very normal,” apart from commercial real estate factors.
The JPMorgan chief executive suspects the United States Federal Reserve will continue its strict monetary policy to curb inflation. Reports by Dimon, the federal funds price could boost to as high as 6 percent or 7%. “I think everyone should be prepared for prices going higher from here,” Dimon remarked. Nonetheless, Federal Reserve chairman Jerome Powell has intimated that the benchmark price may not be raised at the following Federal Open Market Committee (FOMC) meeting on June 14.
CME Group’s Fedwatch tool shows a low probability of a quarter-point price hike next 30 days, with 25.7 percent expecting an increase. It is likewise unclear who will succeed Jamie Dimon as CEO of JPMorgan Chase in the coming years. On Monday, journalists were inquisitive about Dimon’s exit and who will replace the influential banker. Banks are preparing for potential losses by holding onto financial resources, Dimon stressed on Monday. “You’re already seeing credit tighten up because the easiest way for a bank to retain financial resources is not to make the following loan,” Dimon stated.