Dimon's Boom or Bust / Pill Pouring Cold Water
In an interview at the Economic Club of New York on Tuesday, JPMorgan Chase’s chief executive Jamie Dimon described the current state of the US economy as "unbelievable" and that it had been "booming for a while." He was surprised that the Fed’s rapid succession of interest rate hikes had not led to a recession. "We're in pretty good shape and it appears we're heading towards a soft-landing scenario," Dimon said, however warning "I am on the cautious side regarding this."
He did highlight his surprise that the ongoing tensions in the Middle East had not had a bigger impact on the price of oil. “I’m a little surprised that things haven’t gotten worse for oil and gas,” he said, warning that “It doesn’t take a lot to send oil and gas prices back to $120 or higher.”
He recalled a saying that we have not heard on the desk in a while, in that if the markets smell blood they will “do whatever is necessary to cause the most harm to the most people”, believing in the current situation, “this may be one of those set ups”.
Dimon was once again asked about the ongoing rumours that one day he will go into politics, even run for president. “I’ve always said I’d love to be president, but you’d have to anoint me, folks” was his reply. He also offered some advice to whoever will be the leader of the free world after November’s elections.
“I want the next president, whoever it is, to put the other party in their cabinet,” he said. Adding: “So, if it’s Biden, he puts some Republicans in his cabinet. If it’s Trump, he puts some Democrats in his cabinet. I would like to see practitioners go back to government, like all of us, like not me, but you, go help and serve.”
On this side of the pond we heard from the Old Lady’s Chief Economist Huw Pill, who poured cold water on the hopes that the BoE will cut rates anytime soon, even with the recent better news on inflation. Pill believes that there are “greater risks associated with easing too early should inflation persist rather than easing too late should inflation abate”.
"The combination of little news and the passage of time have brought a Bank Rate cut somewhat closer, however, the time for cutting bank rates remained some way off”, Pill noted.
At time of writing, the market is pricing little chance of any rate cuts until Q3 this year, even then it's pricing just over a 50% chance at the August meeting.
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