Geopolitics currently holds the highest risk and is more important for mankind than interest rates in Japan and the United States, JPMorgan CEO Jamie Dimon said in an interview.
Speaking to The Economic Times, Dimon expressed concerns regarding the conflict situation worsening in Ukraine with the Houthi attacks on American ships among other incidents also posing significant danger.
On a question about the US and Japan moving in opposite directions on rates, the yen carry trade, and if the worst was behind us, Dimon said:
I think a lot of that trade has been unwound. It worked for a very long time, and obviously it won’t work if rates are going up in Japan. I wouldn’t call that a risk, I think the real risk I look at now is geopolitical stuff. That dwarfs all other things. And to me, geopolitics is far more important for mankind than interest rates in Japan and the United States.
On Ukraine, Houthi attacks, and oil supply
“Ukraine has gotten worse. The missiles and the bombardment are getting worse. Iran, the Houthi attacks on American ships in the Red Sea. These are very dangerous situations,” Dimon said.
On a question that despite the geopolitical situation, oil prices were falling, Dimon said the commodity was in oversupply today but there was likely to be an undersupply a year or two later.
Oil and gas prices are set by supply and demand. It also include sentiment and inventory. So put it all together, it’s in oversupply today. Europe had to change their flow due to Ukraine.
He said this was a great lesson when we talked about the importance of safe, secure, reliable, affordable energy.
“If you look down the road, there’ll probably be undersupply of oil. That’s maybe a year or two away,” he said.
On talk of recession in the US, Europe, and slowdown in China
Dimon said it was possible for China to recover and pick up from the kind of slowdown it was witnessing.
However, he expressed confidence in India and America.
Dimon said:
Obviously, China’s slowed down. But will they kind of recover and pick up? Possibly. But India is doing well. America continues to do well. We haven’t seen anything like that for a couple of years. I’ve never seen people perfectly pick the inflection points of the economy.
Underscoring the complexities of an economy, Dimon added,
“The economy is a very large, complex, multi-faceted beast. For example, JPMorgan moves $10 trillion a day.
Investors are making decisions, every single day, people are going to work, sending kids to schools and buying food – that’s what drive the economies.”
On India’s performance and its ambition to be a $7-trillion economy
Dimon acknowledged that India was performing better than most (countries).
“I think you guys here have done a fabulous job at that,” he said.
He listed the Aadhar system, banking accounts, GST reforms, national infrastructure development and reduction in regulations as key factors boosting the country and helping the lower-income population, in addition to the wealthy.
Asked about his take on India’s ambition to be a $7 trillion economy in relation to the country’s financial markets, Dimon said the prospects for the same happening were “very bright”.
To give you a bit of perspective, my first trip to India, was in 2005. I had just become the CEO of JPMorgan. And I went to a small building in the old financial district. And I think we did research on 15 or 20 companies. Today, we do research on close to 140 companies which helps educate the world about Indian companies.
He highlighted how JPMorgan banked 850 multinationals in India and has close to 55,000 people in the Corporate Centre supporting global operations and technology.
“It’s engineering, cyber, tech, data, AI. We are building out a robust payment systems here for clients . And all these things you’re doing are gonna make you grow more. And it’s achievable. And you need strong leadership, as you have with PM Modi,” he said, disregarding the impact of the ruling party’s reduced majority in the government on the way he sees India.
“The government, democracy is that way, right? So any democracy you operate in, you have to understand it may move around a little bit, like American democracy,” he said.
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