JP Morgan CEO Jamie Dimon throws cold water: Investors underestimate global risks, absolutely not buying US stocks and long bonds at current prices

Jamie Dimon, CEO of JPMorgan Chase (JPM.US), said that investors are underestimating the risks facing the global economy. At current price levels, he would neither buy stocks nor long-term US Treasuries. In a one-hour interview released on Monday night, Dimon stated that the market has not fully reflected the increasing political and fiscal threats faced by GEO Group Inc. Dimon pointed out, "I do believe these risks may be larger than others imagine." Dimon mentioned the wars in Ukraine and the Middle East, the tensions between the US and China, and the increase in military spending against a backdrop of rising government deficits. When asked if the market is underestimating the likelihood of significant shocks occurring, Dimon said it is difficult to know exactly which risks are already reflected in asset prices. He said, "Some factors may have been digested, but what will actually happen cannot be anticipated in advance." As the head of the world's largest bank by market value, Dimon frequently warns the public about economic risks he sees. His latest remarks contrast sharply with investors' recent willingness to ignore wars, tariffs, and other shocks. With consumer spending continuing, inflation slowing, and investors embracing AI trading, the S&P 500 index has risen nearly 10% this year. Last week, JPMorgan and its peers reported extremely strong quarterly results driven by robust trading and investment banking revenues, further reinforcing the view that the US economy is better able to withstand recent political turbulence than many had expected. Dimon admitted in the interview that the global economy has become more resilient due to lower reliance on energy compared to previous decades, but he warned that this does not eliminate the possibility of sudden turning points. He said, "You may need to put more straw on the camel's back to trigger that tipping point," and added, "Even a re-emergence of war may not be enough to trigger this." Dimon stated that the ongoing US budget deficit will eventually lead to a reckoning and may push up interest rates. "My view is, this will eventually become an issue," he predicted, saying that as so-called "bond vigilantes" demand higher compensation for financing government debt, interest rates will rise. Stocks and AI Cycles When asked if he would buy long-term bonds, Dimon said, "Personally, I would not." Even if the inflation rate falls to the Fed's 2% target, "the yield on 10-year Treasuries should probably be around 4% to 4.5%," he said, adding that he believes there is little room for bond prices to rise. He is also cautious about stocks. While he would consider buying a specific stock if it is "a great investment," Dimon said he would not buy the market at current valuation levels. Dimon also takes a moderate stance on artificial intelligence, comparing today's investment frenzy to the early days of the internet. "The amount of money being poured in is huge. Will it pay off in the end? It might, just like the internet did back then," Dimon said. He also pointed out that during the internet boom, early players like Yahoo and Netscape gradually faded, while later winners like Alphabet Inc. Class C and Facebook emerged. "Will it pay off in the way and timeframe you expect? Absolutely not," Dimon said.