"The Wall Street Godfather" pours cold water: Inflation and interest rates may still be higher than market expectations!

Despite recent signs indicating a easing of inflationary pressures in the United States, the widely recognized "king of Wall Street" and CEO of JPMorgan Chase, Jamie Dimon, issued another inflation warning last Friday. Dimon stated in a statement released alongside the bank's second-quarter earnings report, "(The Fed) has made some progress in reducing inflation, but we still face multiple inflation pressures: massive fiscal deficits, infrastructure needs, trade structural adjustments, and global remilitarization. Therefore, inflation and interest rates may be higher than market expectations." Prior to his remarks, data from last week showed that the Consumer Price Index (CPI) report for June in the United States saw its first decline in over four years, intensifying bets on the Fed cutting rates soon. San Francisco Fed President Daly commented after the CPI data was released that the latest CPI report could be a signal for the Fed to cut rates. Fed Chair Powell's comments earlier in the week to Congress on rising unemployment also gave some investors hope for rate cuts. Powell has started to worry that maintaining high rates for a long time could jeopardize economic growth and predicted that rate cuts could be possible as long as progress in fighting inflation continues. However, Dimon, like many economists, sounded the alarm on the ever-expanding debt and deficits in the United States. So far, the federal government's spending in the 2024 fiscal year exceeds income by $855 billion. In the 2023 fiscal year, government deficit spending reached $1.7 trillion. A report released by the Congressional Budget Office on June 18 predicted that in the 2024 fiscal year, the federal government's budget deficit is expected to reach $1.9 trillion. Powell also warned that the U.S. fiscal deficit is unsustainable. According to the Financial Times, he warned last week that given the state of the U.S. economy, the U.S. fiscal deficit is too high, and lawmakers should address America's fiscal issues "sooner rather than later." While JPMorgan Chase's profit and revenue data released last Friday exceeded expectations, Dimon still issued a warning about potential future risks arising from geopolitical instability. Dimon added, "Geopolitical situations remain complex and may even be the most dangerous since World War II - although the outcomes and their impact on the global economy are still unknown."