Brace for higher oil prices, trade disruptions, says JPMorgan CEO Jamie Dimon

Given the tensions spanning the globe, Dimon said he believes we may be at an inflection point for the free democratic world

JPMorgan Chase chairman and CEO Jamie Dimon has asked investors to prepare for higher oil prices, rising rates and trade disruptions, as geopolitical crises continue to send aftershocks through the globe.

Dimon, who remains steadfast in his cautious approach to the future, spoke to CNBC-TV18 on a range of issues. Here are the edited excerpts:

The need for growth

The world needs capital for remilitarisation, the green economy, the Inflation Reduction Act, or the CHIPS Act but without growth, the picture is ripe for stagflation, Dimon said. The fiscal stimulation was extraordinary, but right now “the United States is on a little bit of a sugar high, and that's a little going to go away”. Without growth, we have stagflation and “that’s not so good”.

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The CHIPS and Science Act passed in 2022 seeks to provide $58 billion in subsidies for semiconductor production in the US. The same year, President Joe Biden signed the  Inflation Reduction Act to cut carbon emissions and boost domestic production.

With the high levels of debt financing and debt across the world, Dimon said it is difficult to determine the effect of that. Other than during wartime, deficits are probably as high as ever.

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"Government spending is inflationary, governments can't simply spend more money and think it's not inflationary but I don't know the effects of that", said Dimon. “People should be prepared for higher oil and gas prices, higher rates as a matter of just being prepared, you know.”

‘Putting myself in the cautious category’

Rising fears of trade disruptions, higher oil prices and the ongoing Ukraine-Russia war continue to drive anxieties. Good leadership from America, China, India and Europe could quell anxieties and ensure the negative doesn't come to light. However, Dimon said, “I'm putting myself in the cautious category."

Among a range of concerns, the current geopolitical situation worries him the most. In the past, global turmoil caused far-spread disruptions on the economical and financial landscape but it is difficult to ascertain the effect of the current international tensions on the economy, he added.

The humanitarian cost of these tensions also has him worried. “We may be at an inflection point for the free democratic world,” said Dimon, adding, “We’ve dealt with deficits before, we've dealt with recessions before; we haven't really seen something like this, pretty much since World War II.”