Jamie Dimon (CEO JP Morgan) Believes That The British Bond Crisis Will Not Be The Only One
Jamie Dimon (CEO JP Morgan) Believes That The British Bond Crisis Will Not Be The Only One
When will the markets rise again?
Things are starting to get serious. A couple of weeks ago, the CEO of JP Morgan made some statements that made investors quite tense, and he said that he saw quite clearly that there was going to be a recession in the next 6-9 months. Or from April to September 2023.
Charlie Munger's famous book, Charlie Almanack, describes very famous biases that all human beings have and that if we know how to control them, we have much to gain in our lives.
In this case, we are talking about authority bias. The authority bias is applied in decision-making, and it is that we tend to overestimate the opinion of an expert, leader, or manager against that of anyone else.
In a crisis situation, the greater the temptation to side with a reassuring authority, the more pronounced the effect will be.
On the other hand, everyone underestimates what they know, and we prefer to rely on someone else's judgment.
What do we mean by all this? Jamie Dimon is very intelligent, and when he speaks, he has second or third-order thinking.
From our point of view, it is clear to us that a recession (even steeper) is near, and we agree with him. Whenever the yield curve has inverted, there has always been a recession, every time without exception.
But we should not forget that the markets have already discounted 25% of their value, at least the S&P 500.
Although we believe that markets may continue to fall, we also believe that the recession will not be as pronounced as the one experienced in 2008.
UK bonds may not be alone.
According to Dimon, the current environment lends itself to seemingly impossible things happening in the coming months as the macroeconomic environment deteriorates. He also noted that the amount of leverage in UK funds surprised him, implying that if they did it, perhaps they are not the only ones.
ECB and BOJ would be the next to fall. We have no doubt that by indebtedness, they would be next. In addition, they have an enormous dependence on the exterior, which puts them in a very weak situation. As if that were not enough, we must take into account the devaluation of the Euro and the yen against the dollar.
Perhaps the US is looking for the weakness of others to reassert its hegemony.
When will the markets rise again?
The next rally could be several years away, and if you are caught off guard, you will miss out on making a lot of money. Not only that, but the 2% CPI will be history, and we will have to live with a CPI of 4-6%, which means that if you do not take advantage of the rise, you will lose much more purchasing power year by year.