J.P. Morgan Warns of “Severe Drop” Risk for Wall Street Stocks
The remarks echoed a recent Bank of England report comparing current AI optimism to the late-1990s dot-com boom.
Quick overview
- Jamie Dimon warns of a potential significant correction in the U.S. stock market due to overstretched AI-driven valuations.
- He cites geopolitical conflicts, fiscal spending, and global remilitarization as key uncertainties affecting the economic outlook.
- Dimon emphasizes the importance of military preparedness and national security in light of increasing global dangers.
- He defends the Federal Reserve's independence amidst political pressures and acknowledges the U.S.'s declining reliability.
J.P. Morgan Chase CEO Jamie Dimon warned that Wall Street could face a significant adjustment in the coming months, saying that artificial intelligence–driven valuations may be overstretched.
Dimon cautioned that there is a high risk of a major correction in the U.S. stock market within the next six months to two years, pointing to multiple sources of uncertainty that could disrupt the global economic outlook.
“I’m much more worried about this than others,” Dimon told the BBC, listing key pressure points: geopolitical conflicts, expansive fiscal spending, and a global remilitarization process that, in his view, “creates a highly risky environment.”
“All of these things create many problems for which we have no answers,” he added, noting growing signs of overheating in the U.S. economy.
Overvalued Markets and the AI Boom
Dimon said he is only moderately concerned about inflation but strongly defended the Federal Reserve’s independence amid pressure from President Donald Trump on Fed Chair Jerome Powell.
He also commented on the rise of artificial intelligence as one of the main drivers of recent market gains, but warned that investor enthusiasm may be pushing valuations to unsustainable levels.
“AI is real and, overall, it will pay off. But just like with cars or televisions, most of the early players in those industries didn’t do well,” Dimon said, predicting that some of the capital pouring into AI will likely be lost.
His remarks echoed a recent Bank of England report comparing current AI optimism to the late-1990s dot-com boom and warning of a possible sharp correction in tech valuations.
Concerns Over Global Security
Beyond financial risks, Dimon reiterated his concern over global security, recalling his earlier warning this year about the strength of U.S. defense capabilities.
“The world is a much more dangerous place. People talk about stockpiling cryptocurrencies, but I always say we should be stockpiling bullets, guns, and bombs,” he said, emphasizing that military preparedness and national security should be top priorities.
In his annual letter to shareholders, Dimon had already warned that the United States could run out of missiles within a week in the event of a conflict with China in the South China Sea.
Fed Independence and Political Tensions
When asked about Donald Trump’s criticism of Jerome Powell—whom the former president called “a fool” for not cutting rates faster—Dimon defended the central bank’s independence and said he is willing to take Trump at his word when he promises not to interfere in monetary policy.
He also acknowledged that the United States has become “a little less reliable” in recent years, though he argued that some government actions helped push Europe to increase its investment in defense and competitiveness.
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