Photographer: Chris Ratcliffe/Bloomberg © 2022 Bloomberg Finance LP Jamie Dimon, the CEO of JPMorgan and one of the most respected Wall Street leaders, gave a stern warning to investors. He advised people to prepare for an upcoming economic “ hurricane .”
At an investor conference on Wednesday, Dimon said, “That hurricane is right out there down the road coming our way.” The chief executive added, “We don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself.”
Dimon alluded to Hurricane Sandy, a storm National Geographic referred to as a “ raging freak of nature .” The hurricane took a big toll, creating destruction, knocking out power for many families and closing down businesses for an extended period of time, spanning the Caribbean to the United States East Coast.
This isn’t what you want to hear from an experienced, sober, serious-minded executive who has seen his fair share of booms and busts over the many decades working in banking and finance. The causes of concern include the Federal Reserve Bank and the government discontinuing their financial stimulus programs started during the pandemic to keep the economy afloat. Instead, the Fed will enact a quantitative tightening program.
This new policy is the nearly direct opposite of what the bank did during the pandemic. Now, Americans will see a contractionary monetary policy that will decrease the amount of liquidity within the economy. The policy is the reverse of quantitative easing, which aimed to increase money supply, in order to stimulate the economy.
Additionally, Dimon has some concerns over the possible escalation of war emanating from Russia’s invasion of Ukraine , rapidly rising inflation and the related increase in costs, along with other uncertainties.
For the last couple of years, it was all about exuberance. Money flowed freely with interest rates held artificially low. As a consequence, the U.S. saw real estate, the stock market and cryptocurrency prices skyrocket higher. Venture Capitalists Went From Bragging To Cutting Costs
Dimon is not a lone voice. The mood is shifting and several prominent venture capitalists , who up until recently bragged about all of the billions they were investing in startups, are now telling their portfolio companies to ensure they have sufficient cash for a rainy day. The message is clear: cut costs and buckle up, as Americans may be in for a wild ride, signaling an end to the booming era. With a new anti-profligating mindset, you are likely to see more tech companies laying off workers and enacting hiring freezes.
Venture funding in the second quarter of 2022 is anticipated to plunge by almost 20%, according to CBInsights . The lofty valuations of startups, including a large number of multibillion-dollar unicorns, will likely see large write-downs in their private market capitalizations.
Sequoia Capital, the venerable venture capital firm that invested in early phenomenal success stories, such as Apple, Uber, Google and other top companies, warned around 250 founders of their portfolio companies of a potential “crucible moment” of uncertainty due to runaway inflation, the shakey markets and nerve-wracking geopolitical events, reported The Information .
The well-regarded startup accelerator Y Combinator , which backed huge winners, such as Dropbox, Coinbase, Airbnb and Reddit, suggested to startup founders that they should start thinking about cutting cuts and tightening their belts with respect to expenses. “It’s your responsibility to ensure your company will survive if you cannot raise money for the next 24 months.” TechCrunch reported on the letter sent to Y Combinator’s portfolio founders, stating, “No one can predict how bad the economy will get, but things don’t look good. The safe move is to plan for the worst.” Layoffs And Downsizings
If you check out LinkedIn, you’ll see a steady flow of members placing the “open to work” banner on their profiles and asking for help to find a new job after being laid off. An increasing number of tech companies have enacted hiring freezes and layoffs . Previously, Dara Khosrowshahi, CEO of Uber, told his team via email that he is tapping the brakes on adding a new headcount at the ridesharing app company. He perceived bringing aboard new people would be considered “a privilege,” in light of the “seismic shift” in the economy and tech sector.
Meta stated that it would reduce hiring for mid-level and senior roles at the social media company. Mortgage startup Better.com, best known for the CEO who fired people via a oneway Zoom video and called employees “ dumb dolphins ,” laid off approximately 4,000 people.
Robinhood, the trading app that gained notoriety […]
source Jamie Dimon Warns Of A ‘Hurricane’ Coming Our Way—Here’s What You Need To Know
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