It's not a good look to start earnings season with JP Morgan warning of tough times ahead. On the one hand, rising rates should result in lending activity becoming more profitable but a looming recession does not bode well for the growth outlook and the fact that the bank is building up reserves exemplifies that narrative.
Jamie Dimon's remarks are often worth watching on earnings day and he is warning that high inflation and waning consumer confidence are going to have a significant toll on the global economy some time down the road. He adds that the bank is also suspending share buybacks temporarily and that is seeing the stock fall by 3% in pre-market at the moment.
Here's exactly what he said in the earnings release:
"In our global economy, we are dealing with two conflicting factors, operating on different timetables. The U.S. economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy. But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity , combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road. We are prepared for whatever happens and will continue to serve clients even in the toughest of times.”