JPMorgan Chase CEO Dimon warns: Inflation and stagnation risks are severely underestimated, and corporate profit expectations will be further lowered.

Jamie Dimon, CEO of JPMorgan Chase (JPM.US), issued a warning on Monday at the bank's annual investor day in New York, stating that the market and central banks are underestimating the risks posed by the record US fiscal deficit, trade tariffs, and political tensions involving GEO Group Inc. Dimon noted that the stock market has rebounded since the low point in April, and investor confidence has improved, but this optimism does not fully reflect the real risks facing the economy. "We have a huge fiscal deficit; and the central banks have been almost too complacent," he said. "You all think they have it under control, but I don't think so." He further pointed out, "Many people are feeling good now because you haven't yet truly felt the power of tariffs. The market initially dropped by 10%, then came back up, this performance demonstrates a shocking level of complacency." His remarks came as Moody's Corporation downgraded US credit ratings last Friday, prompting a reassessment of debt risks in the market. In the past few months, the Trump administration's trade policies have also raised concerns in the market about rising inflation and economic slowdown. Dimon also warned that the current market expectations for S&P 500 companies' earnings are too optimistic. He expects that as companies cut back or withdraw guidance due to uncertainty, these earnings forecasts will further decline. "At the beginning of the year, people predicted earnings growth of around 12%, but six months later, it may drop to 0%," Dimon said. "Once earnings expectations are lowered, the price-to-earnings ratio (PE) will also decline, and stock prices will naturally be affected." He also stated that the market underestimates the possibility of stagflation (simultaneous economic stagnation and inflation), "I think the probability of stagflation occurring is about twice the current consensus in the market." On the business side, JPMorgan Chase also faces some challenges. Troy Rohrbaugh, Co-Head of the Corporate and Investment Bank at the bank, stated that investment banking revenues in the second quarter are expected to decline by a "mid-teens percentage" year-over-year due to corporate clients still being in a "wait-and-see" mode for transactions such as mergers and acquisitions, while trading revenues are expected to increase by "mid-to-high single-digit percentage" year-over-year. The question of when Dimon will step down once again became a focus. He reiterated his statement from last year, saying, "If I do another four years, and then executive chairman for two more years, that's a long time." This indicates that he may officially step down from the CEO position within the next five years. It is worth noting that during the executive speeches that day, Marianne Lake, head of JPMorgan Chase Consumer Banking, had the longest speaking time, a full hour. She is also seen by observers as the most likely candidate to succeed Dimon, especially since Chief Operating Officer Jennifer Piepszak explicitly stated she is not aiming for the CEO position.