JPMorgan Chase Chief Executive Jamie Dimon warned that the war in Iran could push up inflation and drag down financial markets even further if interest rates start to rise.
In his annual letter to shareholders, Dimon said there is a risk of more oil and commodity price shocks in the months ahead, which could lead to prolonged inflation and ultimately higher interest rates.
“The skunk at the party—and it could happen in 2026—would be inflation slowly going up,” Dimon wrote. “This alone could cause interest rates to rise and asset prices to drop.”
The 70-year-old CEO also noted how rapid increases in oil prices helped cause large recessions in the 1970s and 1980s, though the U.S. is less vulnerable to those types of shocks today.
Dimon also said the outcome of conflicts between the world’s great powers, including the wars in Ukraine and Iran, is more important than the financial or economic impacts they might bring.
“We should not turn a blind eye to the role the current regime in Iran has played in fostering terrorism and killing thousands of people, including Americans and many of its own citizens, over many years,” Dimon said. “That threat must be addressed in an appropriate manner.”
Dimon’s annual letter to shareholders has become a tradition since he became chief executive in the 2000s. Over the years, he has moved beyond focusing on JPMorgan’s performance to sharing broader geopolitical and socioeconomic commentary, often warning of what he sees as underappreciated risks to the economy and world.
He offered advice on how the European Union should reform, gave suggestions on how to improve the U.S. public education system and claimed that higher taxes had caused an exodus of people from cities like New York. He said that while the city remains JPMorgan’s headquarters, the bank has shrunk its head count there and warned that no city had a “divine right to success.”
There was plenty about Wall Street in this year’s letter, too. JPMorgan is right in the middle of the ongoing reckoning in private credit, and Dimon predicted that most types of high-risk credit would take a bigger-than-expected hit in a downturn as underwriting standards among many lenders have deteriorated.
He also argued that the push from private credit funds to sell investments to retail clients required “greater transparency” and “higher standards” than was currently the case.
“Not everyone providing credit is necessarily good at it,” Dimon said. “There are many players who are late to this game, and it should be expected that some credit providers will do a far worse job than others.”
He also took a jab at the private equity industry, which has been the subject of criticism in past missives to his shareholders.
“With stock markets at all-time highs in recent months, it is a little surprising that private equity firms, which own close to 13,000 companies, have not taken greater advantage of healthy markets to take their companies public,” he said. “It’s hard to imagine what will happen if and when we have an extended bear market.”
Left unmentioned in this year’s letter was a recent lawsuit brought by President Trump against JPMorgan and Dimon for closing his bank accounts after the Jan. 6, 2021, riot at the U.S. Capitol. Dimon said he supported the deregulatory push Trump has fostered since he took office, adding that JPMorgan planned to help the White House achieve its broader policy goals by supporting industries critical to the country’s military and economic security.
“JPMorganChase is well-positioned to do its part,” Dimon said.
Write to Alexander Saeedy at alexander.saeedy@wsj.com