Making Money panelists Mohamed El-Erian and Neil Datta discuss the Federal Reserve’s five task forces.
CEO of JPMorgan Chase Jamie Dimon said in an interview on Monday that he would not buy stocks or long-dated Treasuries at their current prices because he believes investors are not fully accounting for the risks of turmoil in equity and debt markets.
Dimon said in an CNBC interview that he believes the geopolitical and fiscal risks are “probably greater than others think” amid ongoing conflicts in Ukraine and the Middle East, as well as tensions between the US and China.
He also said rising budget deficits for governments around the world posed a fiscal risk at a time of rising defense spending, which could keep interest rates on government bonds higher.
JPMorgan Chase CEO Jamie Dimon said he is cautious about stock market valuations and won’t buy bonds given current prices and yields. (Caroline Breman/Bloomberg via Getty Images)
Dimon said he wouldn’t buy it long-term treasury bonds given current bond market conditions, saying he thinks interest rates on U.S. Treasuries are likely to remain elevated even if inflation declines.
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The CEO of JPMorgan Chase said he believes “the 10-year bond should probably be in the 4% to 4.5% range” even if inflation returns to Federal Reserve System long-term target of 2%, and said he personally won’t be buying long-term Treasuries and doesn’t see bullish positions in bond prices.
The 10-year Treasury yield is currently around 4.6% and has remained above 4.2% since March after nearing 4% late last year.
The latest consumer price index (CPI) data showed inflation rose 3.5% from a year ago — well above the Fed’s 2% target — despite falling from last month as gas prices eased as the energy market stabilized amid an easing of hostilities between the U.S. and Iran.
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| Ticker | Security | The last one | A change | Change % |
|---|---|---|---|---|
| JPM | JPMORGAN CHASE & CO. | 338.87 | -2.23 |
-0.65% |
Sustained high inflation prompted the Fed to leave interest rates unchanged at the June meeting of the central bank and Fed chairman Kevin Warsh made it clear that politicians will not put up with high inflation.
That led to the market’s view that a rate cut is likely to fall, as CME’s FedWatch tool projects that the federal funds rate will either remain steady or rise by the end of this year.
Dimon also struck a note of caution stock market in an interview, saying he would not invest in the broader market at the high valuations currently found in many top companies and would instead look at individual companies to find a “great investment.”
Dimon compared the growth of investment in artificial intelligence to the growth of the Internet. (Alexander Tamarga/Getty Images for America Business Forum)
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He also compared the impact artificial intelligence (AI) in the market as it reshapes the tech sector and the economy as a whole to what happened during the original Internet boom, saying companies are spending “huge” amounts of money that may not quickly produce the desired results.
“Will it pay off overall? Maybe just like the Internet did,” Dimon told CNBC. “Will it pay off in the way you expect and in the timeframe you expect? Absolutely not.”