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Geopolitics worries JPMorgan's CEO more than a recession

Kitco News

(Kitco News) Recession in the U.S. and Europe is very likely, but it's not what worries JPMorgan Chase CEO Jamie Dimon and Goldman Sachs CEO David Solomon the most.

The risk of a recession in the world's biggest economy is rising as the Federal Reserve continues to tighten monetary policy — with the projected 75-basis-point hike next week and another oversized increase in December.

"We will likely have a recession in the U.S. [and] going to have I think most likely a recession in Europe," Solomon said during a panel discussion at the Future Investment Initiative conference in Riyadh Tuesday. "There is no question that economic conditions, in my opinion, are going to tighten meaningfully from here."

So far, the Fed has raised rates by 300 basis points this year, and Solomon doesn't see the Fed pausing until the federal funds rate reaches 4.5%.

For Dimon, if a recession were to hit, the world would know in about six months.

But the bigger risk is the state of global geopolitics, according to Dimon. "There's a lot of stuff on the horizon which is bad and could — doesn't necessarily — but could put the U.S. in recession," he said at the same conference. "That's not the most important thing we think about. We'll manage through that. I'd worry much more about the geopolitics of the world today."

The most important thing to Dimon is "the geopolitics around Russia and Ukraine, America and China, relationships of the western world," he said. "That to me would be far more concerning than whether there's a mild or slightly severe recession."

Dimon was referring to Russia's war in Ukraine, which has entered its eighth month this week, and the recent developments in China, where leader Xi Jinping consolidated control and cemented a third term.

Dimon also blamed the lack of American leadership. "If you don't have strong American leadership — not ugly American leadership, not 'our way or the highway' — just as a coalescing thing for the Western world, you're going to have chaos like you see in Ukraine," he said.

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