JPMorgan Chase CEO Jamie Dimon warned Monday that markets are dangerously underestimating the economic impact of U.S. tariffs, ballooning federal deficits, and rising geopolitical tensions, signaling that S&P 500 earnings growth could collapse to zero within months. Speaking at the bank's annual Investor Day in New York, Dimon said he sees a disconnect between market optimism and the underlying risks that threaten corporate profits and global stability.
"We have huge deficits; we have what I consider almost complacent central banks," Dimon said. "You all think they can manage all this. I don't think they can." He added that the market's recovery after a 10% drop reflects "an extraordinary amount of complacency."
The JPMorgan chief expressed skepticism about Wall Street's earnings projections, saying the impact of President Donald Trump's baseline 10% tariffs has yet to be fully reflected in corporate guidance. "I think earnings estimates will come down, which means PE will come down," he said, referring to price-to-earnings ratios. Dimon expects current earnings forecasts for the S&P 500-initially near 12% growth for the year-to fall to 0%.
Dimon, who has led the bank since 2006, said the odds of stagflation-where inflation remains elevated during an economic downturn-are "probably two times" what the market currently prices in. That's "basically a recession with inflation," he noted.
Echoing his concerns, Citigroup CEO Jane Fraser said in a blog post Monday that "uncertainty remains" for companies navigating the trade landscape. "Companies are pausing decisions, delaying capex and holding off on hiring," Fraser wrote. "Long-held assumptions are being challenged, not just by tariff announcements but by a deeper confidence shock."
JPMorgan also warned of softening activity in some business lines. Troy Rohrbaugh, co-head of JPMorgan's commercial and investment bank, told investors that investment banking revenue is expected to decline by a "mid-teens" percentage in the second quarter versus last year. Trading revenue, however, is trending higher by a "mid-to-high single digit" percentage.
Chief Financial Officer Jeremy Barnum maintained JPMorgan's net interest income forecast at $90 billion for the year, with the potential for an additional $4.5 billion from trading if market conditions improve. "The outlook is probably slightly better than it was at first quarter earnings," Barnum said, though he acknowledged recent developments had "slightly worsened the output."
Dimon, 69, declined to offer new details on his succession timeline, reiterating that he expects to stay less than five more years. "If I'm here for four more years, and maybe two more [as executive chairman], that's a long time," he said. JPMorgan executives including consumer banking CEO Marianne Lake and asset management head Mary Erdoes are seen as potential successors.
Lake, whose consumer division delivered the day's longest presentation, said the bank will reduce headcount by 10% over the next four and a half years-excluding home lending-as AI and automation drive productivity gains. "We are a growth franchise, and we're gaining share broadly across businesses," she said.
The bank also announced it will increase its technology spending by $1 billion to $18 billion this year. "Our North Star is generating alpha," Erdoes said. "That is all we do. All day long. We obsess about every single basis point."
