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Why you should carefully consider what Jamie Dimon just told the investing world

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This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:

The chart of the day

What we’re watching

What we’re reading

Economic data releases and earnings

I was sitting in a Washington, D.C., hotel room for the start of bank earnings last Friday morning, a.k.a. the official beginning of earnings season.

I had my normal earnings day routine in full effect: Three large iced coffees nearby, a digital notebook, a pair of headphones, soft-to-the-touch Lululemon clothing, and a story template open and ready to rock.

There were three things I wanted to learn from the big banks: 1) charge-off trends (we cover a lot of retail names here at Yahoo Finance), 2) the state of the deal market, and 3) commentary around Wall Street hiring trends.

I proceeded to open up the JPMorgan earnings release. Per usual, I combed through the numbers along the left rail of the first page. Then, per usual, I focused on the box on the bottom right of the page for the latest commentary from its CEO Jamie Dimon.

This comment from Dimon immediately popped out: “This may be the most dangerous time the world has seen in decades.”

“Wow, that is pretty intense from Jamie,” I said to myself. “Never heard that tone from him before — what does it mean to the average investor?”

With that comment right there from Dimon, the complexion of this earnings season has dramatically changed. The approach to investing in the market has changed into year-end, I think.

One sentence by the most powerful CEO in the game today. And when he says something like that it warrants a new way of thinking by investors.

Dimon followed up on this thread on the earnings call: “My caution is that we are facing so many uncertainties out there, you just got to be very cautious.” He added he is concerned about government debt levels and inflation, two topics he has focused on in various venues in recent months.

You may be asking yourself why, several days later, I am still harping on these comments.

Here’s why.

The most powerful CEO in the world with the biggest network and the best information is using all of that to put forth guidance to his various stakeholders and followers. Dimon in no way takes making a statement like that lightly. He knows the gravity of his words.

But then, in reality, Dimon is quite correct in his assessment.

The Israel-Hamas war continues to play out on a grand stage worldwide, injecting fresh geopolitical uncertainties. The Ukraine-Russia war rages. All of this has ties back to China and resurfaces our contentious relationship with that country.

The US House of Representatives is a flat-out mess that is making the country look bad again.‌

There is still a chance of a mid-November government shutdown. Inflation is stubborn and rate hikes continue to permeate the economy. Government debt levels are crazy and getting crazier.

Now if you follow the Warren Buffett style of investing, then none of this stuff matters. You buy stocks deemed attractively valued and shuffle along for the next 75 years drinking Coca-Cola.

Not everyone subscribes to that approach, though, and many are trying to live for today by investing in the markets or other assets. To that end, it feels appropriate to have more caution on asset allocation in the near term until some of the aforementioned issues cool down. Besides, stock valuations aren’t exactly cheap.‌

It often pays to listen to smart people in investing, and Dimon is obviously one of the smartest people in the room.‌

In case you were wondering, I got my charge-off answer.

On JPM’s media call, CFO Jeremy Barnum (another smart exec) told me he isn’t seeing “acute pain” in consumers from higher interest rates. It was a fair response but I think one that suggests those retailers we follow here at Yahoo Finance will report tepid third quarter results.

‌Hey, I am pretty smart, too.

morning brief image

Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.

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