JPMorgan Chase chief executive officer Jamie Dimon highlighted three potential risks facing the country in his annual shareholder letter released Monday, which included inflation, the COVID-19 pandemic and the war in Ukraine.
Dimon saw the U.S. economy’s recovery from the COVID-19 pandemic, surging inflation followed by higher interest rates and the impact of Russia’s invasion of Ukraine and related sanctions on energy and commodity markets as having the most significant impact on the world economy in the foreseeable future.
“We are facing challenges at every turn: a pandemic, unprecedented government actions, a strong recovery after a sharp and deep global recession, a highly polarized U.S. election, mounting inflation, a war in Ukraine and dramatic economic sanctions against Russia,” Dimon wrote in his shareholder letter.
“They present completely different circumstances than what we’ve experienced in the past—and their confluence may dramatically increase the risks ahead,” Dimon said. “While it is possible, and hopeful, that all of these events will have peaceful resolutions, we should prepare for the potential negative outcomes.”
Dimon warned that the Federal Reserve Bank could hike interest rates higher than anticipated, adding to further concerns about potential stock market turmoil.
“This process will cause lots of consternation and very volatile markets,” Dimon said regarding the Fed’s decision to raise interest rates.
Dimon saw the war in Ukraine, along with Western sanctions placed on Russia, slowing the global economy and further hurting the oil, commodity and agricultural markets.
“Many more sanctions could be added — which could dramatically, and unpredictably, increase their effect,” Dimon said in the letter. “Along with the unpredictability of war itself and the uncertainty surrounding global commodity supply chains, this makes for a potentially explosive situation.”
“I speak later about the precarious nature of the global energy supply, but for now, simply, that supply is easy to disrupt,” Dimon added.
Dimon noted that JPMorgan could lose roughly $1 billion over time due to its exposure to Russia.