The chances of the US stock market crashing is far greater than many financiers believe, the head of America’s largest bank has said.
Jamie Dimon, who is the chair and chief executive of the giant Wall Street bank JPMorgan Chase, said he was “far more worried than others” about a serious market correction, which he predicted could come in the next six months to two years.
“I would give it a higher probability than I think is probably priced in the market and by others,” he told the BBC. “So if the market’s pricing in 10%, I would say it is more like 30%.”
Dimon added there were a “lot of things out there” creating an atmosphere of uncertainty, pointing to risks including the geopolitical environment, fiscal spending and the remilitarisation of the world.
“All these things cause a lot of issues that we don’t know how to answer,” he said. “So I say the level of uncertainty should be higher in most people’s minds than what I would call normal.”
The comments are the latest in a string of warnings that stock markets may be due a correction.
On Wednesday, the head of the International Monetary Fund, Kristalina Georgieva, said the world economy had shown surprising resilience in the face of Donald Trump’s trade war, but issued a stark warning about the mounting risks, saying: “Buckle up: uncertainty is the new normal.”
“Before anyone heaves a big sigh of relief, please hear this: global resilience has not yet been fully tested. And there are worrying signs the test may come,” she told an audience at the Milken Institute in Washington.
Meanwhile, concerns are increasingly being aired that a stock market bubble has been created by high valuations of AI companies, with the Bank of England stating on Wednesday that there is a growing risk of a “sudden correction” in global markets.
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Dimon conceded that some of the money being invested in AI would “probably be lost”.
He added: “The way I look at it is AI is real; AI in total will pay off – just like cars in total paid off, and TVs in total paid off, but most people involved in them didn’t do well.”
