Some Wall Street celebrities believe that a US recession is now likely, if not inevitable. But they have bigger worries on their minds.
JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon said Tuesday that he is more concerned about global geopolitics than slowing US economic growth.
“There are a lot of bad things, but not necessarily, that could send the U.S. into recession,” he said during a panel at the Future Investments Initiative conference in Riyadh, Saudi Arabia.
“It’s not the most important thing we think. We’ll manage it. We’ll worry more about the geopolitics of the world today,” he told CNN’s Richard Quest. at an event also known as “Davos in the Desert”.
Dimon revolves around Russia’s war in Ukraine and relations between the United States and China, where President Xi Jinping has just consolidated his grip on power and sidelined officials who have pushed for reforms and opening up the world’s second-largest economy. He said he was referring to the problem.
“Western world relations will be far more worrisome than whether there will be a mild or moderately severe recession. [in the United States],” he Added.
The breakdown of ties and the negative consequences for everything from national security to energy supplies to food security were persistent themes during the debate. Dimon and Blackstone Group (BX) CEO Steven Schwartzman pointed to the isolated effects of the pandemic, saying it affected communication between people and their ability to learn from each other.
“We are becoming more and more deglobalized,” says Schwarzman.
Billionaire Ray Dalio, founder of hedge fund Bridgewater, said there was a “survival risk of international warfare.” What is needed, he added, is a “strong political middle ground” that is “stronger than the extremes.”
Underlying many of these problems, according to Dimon, is a lack of American leadership.
“Without strong American leadership, there would be chaos like the one we see in Ukraine as ugly American leadership, not ‘our way or the highway,’ but as a coalition of the Western world,” he said.
Dimon said he was confident that relations between the United States and Saudi Arabia would remain strong despite tensions raised by OPEC+’s decision to cut oil production earlier this month.
“Saudi Arabia and the United States have been allies for 75 years. I can’t imagine an ally who agrees on everything and doesn’t have problems. .
Dimon commented on the possibility of a US recession, saying that while US business and consumer spending have been strong so far, Americans will probably run out of “surplus money” around the middle of next year. rice field.
Goldman Sachs (GS) CEO David Solomon also spoke at the same panel and believes a US recession is likely.
“I have no doubt that economic conditions will tighten significantly from here,” Solomon said, referring to the rate hikes by the US Federal Reserve. “If you get into a situation where inflation has taken hold, it’s very difficult to get out of it without an economic slowdown,” he added, commenting that Europe may already be in recession.
Schwartzman also highlighted rising interest rates and “international relations issues” as key challenges facing businesses.
To that list, he added social media.
“One of the things we are unaware of is how difficult it is for governments to function in the world of social media,” said Schwarzman. Initiatives to “make the world a better place” are being thwarted by people “condemned by some minorities” who want to achieve something for the good of the world, he added.
Dimon said social media users should be authenticated in the same way people require verification to access banking systems, which will help “get rid of bots.”
Social media users should also be provided with a “menu of choices” for algorithms that explain how each algorithm works. “They should give you choices, not manipulate you,” he added.
When asked what type of algorithm to choose, Dimon replied:
Despite the downsides of social media and political and economic divisions, Panelists were optimistic about the power of innovation to improve the state of the world.
“We can sit here and talk about all the things that are headwinds to growth…but the innovation economy is alive and well,” Solomon said.
Technological advances in fields ranging from quantum computing to artificial intelligence to advances in education and healthcare are “extremely powerful” and “have the power to lift us up and propel us forward,” he added. I was.
Saudi Arabia’s Future Investments Initiative, which runs until October 27, was launched in 2017 under Crown Prince Mohammed bin Salman’s “Vision 2030.” This is a plan to attract international investment and draw the economy away from oil.