Cnn
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The CEO of JPMorgan Chase, Jamie Dimon, said that the complete effects of the prices have not yet been felt and that the markets have an “extraordinary quantity of complacency” in the face of these risks and others.
“When I saw all these things add up that are on the sidelines of the extreme, I do not think that we can predict the result, and I think that the chances of inflation increase and that stagflation is a little higher than the others think so,” said Dimon during the annual day of investors of his business on Monday. “There are too many things there, and I think you will see the effect.”
“Even at these low levels, if they stay where they are today, (these are) fairly extreme prices. And you also don’t know how each country will react,” he said. And business partners react by concluding agreements with other countries, he added.
In addition, Dimon said that the United States cannot quickly use goods produced in the country for these imports, adding that it takes three to four years, at least, to build a manufacturing plant.
On April 2, which Donald Trump called “Liberation Day”, the American president imposed new extensive tariffs on business partners, to partially bring them back a week later. The stay was supposed to last 90 days to allow countries to negotiate with the administration.
Trump officials said that around 100 countries had proposed to negotiate transactions, putting an extremely difficult task in front of American commercial negotiators to run against the stopwatch to make new commitments.
Last week, the United States and China agreed to radically make prices on the goods of the other for an initial period of 90 days, in a surprise breakthrough. However, prices of at least 30% on the vast majority of products from China are always difficult for small American companies as well as for retail giants.
Dimon said that he thought that the chances of stagflation – an economic circumstance of high inflation associated with stagnant growth or, worse, a recession – are probably twice that of what others have projected.
In this case, he said, credit losses would increase, not to the extent that they did during the financial crisis 17 years ago, but worse than expected.
“I think that there have been a fairly joyful 15 years of credit, many new credit players, different alliances, different leverage ratios, the lever effect in addition to the leverage, things like that,” he said. “So, I think I would expect the credit to be worse than people at thought with each recession.”
On May 16, Moody’s degraded the debt of America on its previously perfect AAA credit rating. It was the last of the three main credit rating agencies to strip treasury bills of their flawless reputation. Explaining its justification to reduce its credit rating in the United States for the first time since 1917, Moody’s cited American debt levels in American balloon and Washington’s intransigence on budget deficit solutions.
American shares finished slightly higher on Monday after the initial decline. The DOW increased by 137 points, or 0.3%. The wider S&P 500 increased by 0.09% and the NASDAQ, heavy with technology, was 0.02% higher.
Investors have sold the US Treasury bills. The reference return to 10 years, which is negotiated in an opposite direction at its price, increased almost 4.5%, and the yield of 30 years was just under 5% after having initially crossed this threshold earlier during the day. The US dollar dropped 0.6% against a basket of currencies. Meanwhile, gold, a traditional refuge, increased by $ 3,232 per ounce Troy.
US active investors were on roller coaster this year. The initial excitement concerning the policies adapted to the affairs of President Donald Trump and the tax cup brought actions to a record in mid-February. But this fervor quickly gave way to an extreme fear of Trump’s trade policy, sending investors who flow from American assets in what market observers have called “Sell America” trade.
