© . FILE PHOTO: Jamie Dimon, CEO of JP Morgan, speaks at luncheon at the Boston College Chief Executives Club in Boston, Massachusetts, US, Nov. 23, 2021. REUTERS/Brian Snyder By Michelle Price WASHINGTON () – Jamie Dimon, CEO of JPMorgan Chase & Co (NYSE:) released its meticulous annual letter to shareholders Monday, addressing critical issues including the war in Ukraine, the energy crisis, sanctions, inflation and interest rates. Here are five of the key points from the letter: THE US ECONOMY IS STILL STRONG… Dimon has long been optimistic about the US economy and echoed that message in his letter, noting that the average US consumer is “in excellent financial condition” is leveraged to lowest ever, excellent mortgages, plentiful jobs with wage increases and over $2 trillion in excess savings. …BUT INFLATION WILL REQUIRE AGGRESSIVE RATE INCREASES The Federal Reserve and government were right to take bold steps during the pandemic, but the stimulus likely took too long, Dimon said. He believes the rate hikes needed to contain inflation are “significantly higher than the markets expect”. Dimon also had some advice for the Fed: It shouldn’t worry about the rise in market volatility unless that volatility affects the economy. It must be flexible in its plan and willing to react quickly to events on the ground. THE WAR IN UKRANE WILL SLOW UP THE WORLD ECONOMY “The hostilities in Ukraine and the sanctions against Russia are already having a significant economic impact,” Dimon wrote. JPMorgan economists believe the euro area, which is heavily dependent on Russia for oil and gas, will see GDP growth of roughly 2% in 2022, rather than the 4.5% rate expected just before the invasion. By contrast, they expect the US economy to grow by about 2.5%, from a previously estimated 3%, Dimon wrote. “These estimates are based on a fairly static view of the war in Ukraine and the sanctions now in place,” Dimon wrote. More sanctions against Russia are possible, he noted. “Along with the unpredictability of the war itself and the uncertainty surrounding global raw material supply chains, this creates a potentially explosive situation,” he wrote. … THE WORLD MAY HAVE AN “HAZARDOUS” MOMENT The confluence of the dramatic stimulus-fueled recovery from the pandemic, the likely need for rapid rate hikes, the war in Ukraine and sanctions against Russia may be unprecedented. “They present completely different conditions than what we’ve experienced in the past — and their confluence could dramatically increase the risks ahead,” Dimon wrote, adding that the war will also affect geopolitics for decades. WITHOUT STRONG AMERICAN LEADERSHIP WILL HAVE “CHAOS” “American global leadership is the best path for the world and for America,” Dimon wrote. As nature abhors a power vacuum, it is becoming increasingly clear that without strong US leadership, “chaos is likely to reign,” he added. He noted, however, that the world does not want an “arrogant” America to rule everyone, but an America that cooperates with allies and compromises. “We can only organize military and economic frameworks that make the world safe and prosperous for democracy and freedom if we work together with our allies,” he added.
