Jamie Dimon warns that the market is too complacent: S&P 500 profits will drop to zero, and the risks of inflation and stagnation are rising.

Market overconfidence, Dimon points out three major concerns.

JPMorgan Chase CEO Jamie Dimon issued a warning this Monday at the annual Investor Day event in New York, believing that the current market's risk assessment of the U.S. fiscal deficit, trade tariffs, and international tensions is overly complacent. He stated: "We have a massive deficit, and I believe we have a central bank that is too complacent. Everyone thinks the central bank can handle all of this, but I do not see it that way."

Dimon further pointed out that the current optimistic sentiment in the market is based on a reality that has not yet fully manifested, especially regarding the actual impact of tariff policies. He emphasized that it is an unusual phenomenon for investors to underestimate potential economic risks.

Will S&P 500 profits "go to zero"? Dimon warns

Regarding corporate profit expectations, Dimon expressed great pessimism. He predicts that due to increased uncertainty, the profit growth expectations for S&P 500 constituent companies will decline from about 12% at the beginning of the year to possibly "0%" within the next six months. He believes that once companies begin to lower their financial forecasts, investors will readjust price-to-earnings ratios, leading to a drop in stock prices.

He bluntly said, "I believe profit expectations will be lowered, which also means that the price-to-earnings ratio will decline."

The risk of stagflation has doubled.

Dimon is not only pessimistic about the profit prospects for businesses but also expresses deeper concerns about the direction of the economy. He pointed out that the market is underestimating the possibility of "stagflation," which is a phenomenon where economic growth stagnates while inflation occurs simultaneously. He indicated that the probability of this scenario is about twice that of what the market currently widely expects.

The investment banking business has slowed down, and companies are still observing.

Troy Rohrbaugh, a senior executive at JPMorgan, added that corporate clients remain cautious regarding mergers and capital market operations. He predicts that investment banking revenues in the second quarter will decline by a "mid-teens percent" (13% to 17%) compared to the same period last year, but the trading division is showing slight improvement, expected to grow by "mid-to-high single digits."

The successor has not been determined, and those who speak the longest have the highest hopes.

As for the succession issue of Jamie Dimon, he stated that there is currently no change and reiterated the timeline he mentioned last year: "If I do another four years and then serve another two years as executive chairman, that would be considered a long time."

It is worth noting that Marianne Lake, head of the Consumer Financial Services division, received a full hour of speaking time at the meeting, making her the executive with the longest speaking time of the day and one of the top candidates for succession. In contrast, another potential successor, Chief Operating Officer Jennifer Piepszak, has publicly stated that she will not pursue the CEO position.

In this article, Jamie Dimon warns that the market is too complacent: S&P 500 profits will go to zero, and the risks of inflation and stagnation are rising. Originally appeared in Chain News ABMedia.