JPMorgan Chase & Co. CEO Jamie Dimon has stated that investors are underestimating the risks facing the global economy and that, at current price levels, he would not buy stocks or long-term U.S. Treasury bonds. In an hour-long interview released Monday evening, Dimon indicated that markets are not fully pricing in the growing geopolitical and fiscal threats.

He pointed out, "I do think these risks could be larger than others think." Dimon cited the wars in Ukraine and the Middle East, U.S.-China tensions, and the rise in military spending against a backdrop of increasing government deficits. When asked if markets are underestimating the probability of a major shock, Dimon said it is difficult to know precisely which risks are already reflected in asset prices. He remarked, "Maybe some of it is already digested, but you cannot digest what actually happens in advance."

As the head of the world's largest bank by market value, Dimon frequently warns the public about the economic risks he perceives. His latest comments stand in sharp contrast to investors' recent willingness to look past wars, tariffs, and other shocks. The S&P 500 has risen nearly 10% this year as consumers continue to spend, inflation moderates, and investors embrace the AI trade.

Last week, JPMorgan and its peers reported exceptionally strong quarterly results, driven by robust trading and investment banking revenue, further reinforcing the view that the U.S. economy has withstood recent geopolitical turmoil better than many expected.

During the interview, Dimon acknowledged that the global economy has become more resilient due to lower dependence on energy compared to previous decades, but he warned that this does not eliminate the possibility of a sudden tipping point. He stated, "You might need to put more straws on the camel's back to cause that tipping point," adding, "Even the current resurgent wars may not be enough to trigger it."

Dimon expressed that persistent U.S. budget deficits will eventually lead to a reckoning and could push interest rates higher. "My view is that this will eventually be a problem," he predicted, suggesting that rates will rise as so-called "bond vigilantes" demand higher compensation to finance government debt.

Equities and the AI Cycle

When asked if he would buy long-term Treasury bonds, Dimon stated, "Personally, no." Even if inflation falls back to the Federal Reserve's 2% target, "the 10-year Treasury yield probably should be around 4% to 4.5%," he said, adding that he sees little room for Treasury prices to appreciate.

He expressed similar caution regarding stocks. While he would consider an individual stock if it were "a great investment," Dimon said he would not buy the broad market at current valuation levels. Dimon also struck a measured tone on artificial intelligence, comparing the current investment boom to the early days of the internet.

"The amount of money being invested is huge. Will it pay off in the end? Probably, like the internet did," Dimon said. He also noted that during that internet boom, early major players like Yahoo and Netscape faded, while eventual winners like Google and Facebook emerged later. "Will it pay off in the way and on the timeline you expect? Absolutely not," Dimon concluded.