JPMorgan Chase CEO's "Warning Barrage": Markets Are Too Complacent, S&P 500 Earnings Growth Will Collapse!

Jamie Dimon, CEO of JPMorgan Chase, widely recognized as the "king of Wall Street," warned on Monday that markets and central bank officials are underestimating the risks posed by the US's record deficits, tariffs, and international tensions.

That day, Dimon elaborated on his views at JPMorgan Chase's annual Investor Day conference in New York. He said he believes the risks of heightened inflation and even stagflation are not adequately reflected in stock market valuations, with US stocks having rebounded from their April lows.

"My personal view is that people are feeling too good about themselves because you haven't seen the actual impact of tariffs yet. The market fell 10% and then rebounded 10%. That's an extraordinary level of complacency," Dimon said.

"We have huge deficits; our central bank, in my view, is almost complacent. You all think they can handle everything. I don't think they can," he added.

Dimon's remarks came after Moody's announced it was downgrading the US government's top credit rating from Aaa to Aa1, citing concerns over the country's growing debt burden. Over the past few months, markets have been volatile due to fears that US President Trump's trade policies would drive up inflation and slow growth in the world's largest economy.

That day, Dimon also warned that the market's current earnings expectations for S&P 500 companies are overly optimistic. He expects these earnings forecasts to decline further as companies cut or withdraw their guidance amid uncertainty.

"Earnings growth was projected to be around 12% at the beginning of the year, but it could drop to 0% in six months," he added: "Once earnings expectations are revised downward, the price-to-earnings (PE) ratio will also decline, and stock prices will naturally be affected."

In addition, the question of when Dimon will step down has once again come into focus. He reiterated what he said last year: "If I serve another four years and then two more as executive chairman, that's a long time." This suggests he may officially retire as CEO within the next five years.

Tariff Impact

When discussing macroeconomic topics, Dimon's comments were even sharper. He believes the full impact of the Trump administration's tariffs has yet to be felt, and even at current levels, tariffs are "quite high."

He further warned of the many risks posed by trade, noting that the likelihood of rising inflation and stagflation is higher than people think. According to Dimon, the probability of stagflation (a period of economic decline accompanied by rising inflation) "could be twice what the market expects."

Additionally, geopolitical risks are also a cause for concern. Dimon stated that the risks are "very, very high." He said, "We don't know how the next few years will unfold."

Dimon is not the only major bank CEO who issued a warning on Monday about the impending impact of tariffs. Jane Fraser, CEO of Citigroup, stated in a blog post that "uncertainty remains." She wrote, "Businesses are pausing decisions, delaying capital expenditures, and halting hiring."

She pointed out, "We are entering a new phase of globalization—one less dominated by cooperation and more by strategic self-interest. Long-held assumptions are being challenged, not only by tariffs but also by deeper confidence shocks. Short-term impacts are already evident, and the long-term trajectory is being rewritten in real time."

On this point, JPMorgan Chase did provide an indication that some clients' businesses may be slowing down this quarter.

Troy Rohrbaugh, co-CEO of JPMorgan Chase's Commercial and Investment Bank, said the bank informed investors that due to corporate clients remaining in a "wait-and-see" mode regarding transactions such as mergers and acquisitions, JPMorgan Chase's investment banking revenue in Q2 is expected to decline by a "mid-to-high single-digit percentage" YoY, while trading revenue is expected to increase by a "mid-to-high single-digit percentage" YoY.

Investment banking revenue primarily relies on corporate transactions.