JPMorgan Chase CEO Jamie Dimon, in his annual shareholder letter, issued a warning that the oil and commodity price shock triggered by the Iran war could lead to persistently high inflation, which would in turn drive up interest rates and depress asset prices. The Iranian regime’s long-term support for terrorism and its threat causing massive casualties “must be dealt with appropriately.” In his view, the eventual outcomes of the wars in Ukraine and Iran are even more important than the financial and economic impacts of the conflicts themselves.
Dimon noted in the letter that oil and commodity prices face the risk of further shocks in the coming months, which could lead to sustained inflation and ultimately drive interest rates higher. Citing historical lessons, he pointed out that rapid oil price increases were a major trigger for several severe economic recessions from the 1970s to the 1980s, though he acknowledged that the United States is now more resilient to such shocks than it was back then.
Regarding internal risks within the financial system, Dimon expressed clear concerns about the private credit market. He predicted that in the event of an economic downturn, most high-risk credit products would suffer greater shocks than the market expects, as underwriting standards at many lending institutions have significantly deteriorated. Dimon also criticized the trend of private credit funds selling products to retail customers, arguing that this area currently lacks sufficient transparency and appropriate regulatory standards. He wrote: “Not all institutions providing credit are good at it; many players are latecomers, and some credit providers will predictably perform far worse than others.”
Dimon also questioned the pace of public listings by the private equity industry. He pointed out that, with stock markets near historic highs in recent months, it is quite surprising that private equity firms, which collectively hold nearly 13,000 companies, have not more aggressively taken advantage of the favorable market environment to push their portfolio companies to go public. He warned: “If we really enter a prolonged bear market, it’s hard to imagine what will happen then.”
On policy stance, Dimon expressed support for the Trump administration’s deregulatory efforts and stated that JPMorgan Chase plans to assist the White House in achieving broader policy goals by supporting industries critical to U.S. military and economic security. Additionally, in his letter, Dimon put forward a series of proposals on issues such as EU reforms and improving U.S. public education, while also criticizing high tax policies in cities like New York.
