JPMorganChase & Co. (NYSE:JPM) CEO Jamie Dimon made comments during the Norges Bank Investment Management Conference, warning that when a private credit cycle hits, it could be "worse than expected."
Dimon added that while major private credit firms like KKR, Carlyle, Blackstone, and Ares may be well positioned to handle a market downturn, the space includes more than 1,000 firms, and not all are likely to perform well when the credit cycle turns.
"Some firms may be brilliant, but I guarantee you not all 1,000 of them are," Dimon said. "So in my view, because of that and the underwriting standards, we haven't had a credit recession in so long, so when we have one, it will be worse than people think. It won't be terrible; it'll just be worse than people think in private credit. That may be true for some banks, too, by the way. It's not just private credit."
Dimon reiterated his previous sentiment on the topic, noting that private credit is "not systemic."
Primary Areas Of Concern: Cybersecurity, Geopolitics
On cybersecurity, Dimon pointed to emerging AI capabilities—specifically referencing Anthropic's "Mythos" model, designed to detect and expose system vulnerabilities. While such tools can strengthen defenses, he warned they could just as easily be used by malicious actors.
"The bad guys can use cyber, and they're only going to get stronger and more capable at finding vulnerabilities," he said, briefly underscoring the risk.
On geopolitics, Dimon said he isn't overly concerned about the U.S. economy, likening it to the weather: "it's going to get better." His greater worry lies with global tensions—particularly the wars in Ukraine and Iran, as well as the state of relationships with NATO and key trading partners.
"I think the worst thing we can do is fragment it," he said, referring to the global economic order. Dimon noted that the United States has around 60 military allies and partners, emphasizing the importance of maintaining unity across the Western world. Preserving those alliances, he argued, is critical to avoiding the kind of fragmentation that rivals like Russia and China would prefer.
Dimon also noted that he is not currently concerned about inflation, stating that the worst-case scenario would be stagflation.
"We would be fine but it would put a lot of stress on the system. My view is that there's a lot of inflationary things out there including the Iran war, the remilitarization of the world, the infrastructure needs of the world and our deficits. I don't know how the world running deficits like this isn't inflationary. It is possible that inflation ticks up and that will catch a lot of people off guard," Dimon said.
Photo Courtesy: lev radin on Shutterstock.com
Login to comment