Tags: jamie dimon | worry | negative | interest | rates

Jamie Dimon's One Big Worry: Negative Interest Rates

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By    |   Wednesday, 22 January 2020 09:26 AM

J.P. Morgan Chase CEO Jamie Dimon said that negative interest rates are one of the only things that concern him in a market that’s otherwise in a “Goldilocks place.”

“The only thing I have trepidation about is negative interest rates, QE, and the diversion between stock prices and bond prices and yield and stuff like that,” Dimon told CNBC.

“It’s kind of one of the great experiments of all time, and we still don’t know what the ultimate outcome is,” Dimon said.

“I think it’s very hard for central banks to forever make up for bad policy elsewhere,” Dimon said. “That puts in them in a trap. We’re a little bit in that trap today with rates so low around the world.”

“I would never buy a negative rate bond, not unless I was forced,” Dimon added. “In history whenever you’ve seen anything like that, it doesn’t necessarily end well.”

Other respected economic voices have also alerted savvy traders of their worries as the new decade begins.

David Rosenberg believes an economic slowdown is on its way despite enduring job gains, easing trade tensions between the U.S. and China, and record-breaking stock markets in North America, Bloomberg explained.

He suggested investors shelter in gold, bet on emerging markets and buy “bonds in drag.”

“If things are so great, why did the Fed have to cut rates last year?” he said in an interview at Bloomberg’s Toronto office. “If things are so great, why did the Fed have to embark on QE4, that we’re not supposed to call QE4?”

Rosenberg started his own independent research firm in January -- Rosenberg Research and Associates Inc. -- after more than a decade as chief economist at Gluskin Sheff & Associates Inc. His warning of a U.S. housing bubble in 2005 when he was at Merrill Lynch proved prescient but he stayed bearish long after the economy had revived. He was bullish for five years starting in 2012 but has turned negative in recent years.

The roaring stock market is essentially a “bull market in financial engineering,” stoked by the Fed Reserve’s purchases of Treasury bills starting in October, interest rate cuts, U.S. President Donald Trump’s tax overhaul (which handed America’s top banks a $32 billion windfall) and corporate share buybacks, Rosenberg said.

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J.P. Morgan Chase CEO Jamie Dimon said that negative interest rates are one of the only things that concern him in a market that’s otherwise in a “Goldilocks place.”
jamie dimon, worry, negative, interest, rates
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2020-26-22
Wednesday, 22 January 2020 09:26 AM
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