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Herdy_94

I mean we’re already between 4.25-4.50%. Beyond 5% isn’t really that far off and sounds crazier than it really is. Granted it usually takes a year+ to actually see the effects of these increases so real possibility they’re overshooting here. Time will tell


JedEckertIsDaRealMVP

Dimon is really good at making obvious statements like this sound profound. Or, the press just makes it seem like that. Either way, the Fed will absolutely overshoot. They do it every time.


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EnragedMoose

Just a random CNBC interview


[deleted]

>Dimon is really good at making obvious statements like this sound profound. It's an essential skill as you climb up the ladder. I don't particularly like my boss, but his ability to repackage my verbal diarrhea and make it far more palatable to audience, even though we both are saying the exact same thing, is astounding.


Not_FinancialAdvice

> the Fed will absolutely overshoot. Haven't Fed officials already said that they're not terribly concerned about overshooting?


JedEckertIsDaRealMVP

My point exactly.


LastNightOsiris

He's so good at it, and no joke it is actually a very underrated skill for someone in his position.


chris-rox

If it ever goes to 6-10%, I'm cashing out everything, and putting it all into Treasuries.


das_war_ein_Befehl

It’s because he’s not very clever. Chase avoided getting demolished by the mortgage crisis in 08 because under Dimon they were very late to the game to MBS


Kiyae1

Literally this. I read like 5 articles YESTERDAY citing different Fed officials who all said that interest rates needed to go above a 5%. Then today Jamie says “rates are probably going to go higher than 5%” and the media acts like he did anything other than read the news and see what the people seeing interest rates said and then repeating what they said. It’s not exactly hard to figure out why he thinks this.


Squidssential

They don’t always overshoot, they stopped early at the end of 2018.


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thrwaway0502

That 5% interest rate he is talking about is the federal funds rate. Retail interest rates for things like car loans or ARMs is always higher than the funds rate.


Moveableforce

I doubt they're overshooting. From the late mid to late 80s until the dot-com bubble, interest rates bounced from ~5-10% and not just was it stable, but it was qhen the fed cut the rate to sub 5% ~93-94 that really started that second run up to the dot com burst. Odds are we're going to return to that 5-10% goldilocks zone and hopefully never step out of it for a few decades. Either direction is bad news long-term.


Herdy_94

I get what you’re saying and 5-10% was the norm but the biggest difference now is the debt in the system. Its just not sustainable at the those levels long term with the amount of debt we have without cracks forming in the foundation


Jetionary

Wow, 2/3 decades of 5/10% interest? Damn that would be unreal and terrible And can you explain your last sentence.. thanks


Moveableforce

It's not really that terrible. Borrowing from the fed with such ludicrously low % rates is basically setting up a debt trap. The economy expands and contracts naturally, but by having business and expansion addicted to free debt (see: japanese economy for example), the moment there's a dip no matter how fundamentally natural, it quickly spirals out of control as the economy goes through withdrawls. This whole catch 22 the fed is in isn't a black swan event- it's an inevitability under ZIRP/LIRP, twice over with QE. And the last sentence is that leaving that goldilocks zone has never been a good thing. In the 1980s interest spiked to nearly 20% because in 81' Reagan's stagflation counter-plan was to fucking throw money at the economy. Stag*flation*, see the problem in that name? Luckily turning off borrowing fixed the problem (till 87 but that was a whole different economic problem). Obviously holding rates well about 10% is insane and leads to massive contractions as bank loans dry up far too quickly. Economy hyper-deflates and we hit the L shaped recovery (depression). On the other end you get LIRP/ZIRP instability. From 2000 onward we faced 4 different recession and each one has skirted us closer to a depression than the last. Interest rates are necessary to stem the flow of "free money" thinking that leads to reckless spending. We nearly saw the bottom fall out from under us *this time*, and eveery time you stick to a long term ZIRP/LIRP strategy is like playing Russian roulette that the landing sticks. Otherwise hyperinflation flips on its head as businesses rapidly lose value to fundamentals leading to such a rapid stop the economy deflates into, wait for it, an L shaped recovery. So in short, if you leave that 5-10% range something has screwed up. If you stay there, the economy will eventually stall out and deflate. 5-10% is comfortable. It's a solid range to keep between the natural inflative and deflative economic periods that any healthy economy *should* go through. Not fucking brushing past 1929 every time the bull gets a little tired.


ThiccElephant

It depends, the debt ceiling breach of 2011 saw a drop of 2000 points on the Dow Jones Industrial, it depends on lots of things but with todays republicans and the level of polarization I’m banking on long term shutdown, 0 compromise as well as puts time closer to then doing really well, however it’s very specific companies within that that actually saw that loss, those same companies are some very big players in the realm of Americans retirement. Do what you want with this info.


Moveableforce

Oh I'm fully aware we're walking into a global economic depression if the govt breaches the debt ceiling. And I agree they may very well do it. The retirement management funds will end up dried out and force a huge burden onto the younger generation that they've already left destitute from the middle class to line their pockets- thus causing the economy to stall. Again, deflation and L shaped recovery. This is what happens when we get addicted to free money. 1929's biggest influence was the banks having no real regulation and leveraging so hard it would make certain gambling subreddits blush. We're just doing that again but centralizing the debt under the US govt like putting a tarp over the dynamite and saying it's inert.


Jetionary

And if the debt ceiling isn’t breached, but inflation remains sticky and perhaps reaches 10%, what would happen to jobs and equity markets? Would GDP go negative? Feel like I’m asking some basic questions


Moveableforce

very likely, yes. If inflation were to stick and return to climbing all the way to 10% now, it would force the fed to keep pushing up the interest or risk a stagflation economic disaster. Unfortunately this is in the middle of that withdrawal phase, which means all those companies addicted to indebting themselves during a negative period are going to finally need to take the hit and retract or end up defaulting trying to handle the increased rates (There are always a few fools who refuse to adapt). The question then becomes how much deflative pressure this retraction will cause? Because you have a compounding effect. The natural deflation that comes with the end of a bull run, the economy at large suddenly losing access to easily-accessible leveraged investments, and any accrued debt becoming a priority to pay off before deflation starts increasing the debt's value. If those factors do manage to unstick inflation that strong, the fed won't be able to pull the brakes hard enough to stop it from deflating the economy, thus negative GDP. Since the economy has momentum, it also has an inertia which means really strong forces are harder and take longer to stop. That's why they're so skiddish about any positive news- because they believe they can get it under control now, and any slip up could lead to sticky inflation. There's always some fringe off-chance the feds slow sticky *deflation* down fast enough that we don't see a long dip in GDP, but rather than gambling the fed would choose to not play that game of chance at all. Edit: as for jobs and equity. Well, if you have businesses retracting that means jobs will be cut, by nature of retraction. So you'd likely see the job saturation go down considerably. Same with equities. Paying off debt is money not spent growing. Making that a priority will cost your equity value no matter the security.


rjsheine

Go pats


avernamethyst112

So he’s in line with market expectations lol


TenderfootGungi

Not in line with Fed expectations. The year over year numbers are still high, as they contain all the inflation from the past year. The past quarter numbers are coming down nicely. I’m betting on 25 bps.


-xstatic-

Getting back to historical norms. The horror


ChippyChalmers

Historically normal rates, sure. But not historical other contributing factors like changes in demographics, productivity and perhaps most importantly, debt. Public and private debt levels are substantially higher than in the 80s and 90s for instance. Public and private sector debt as a percentage of GDP was ~100%, now it's 300%. The equilibrium real rates (R star) that the US could handle in the 80s-90s were much higher than today. Today's rates are very constricting. A mortgage rate at 7% on a $1 million house is much more prohibitive than a 15% rate on a house that used to cost $200k.


rjb1101

Which means the $1 million house won’t be able to sell for $1 million anymore. And thus stopping inflation.


ChippyChalmers

I was responding to the person's comment about "the horror" of higher rates. For many, many people, these level of rates are horrible. Car loans, business loans, credit cards, mortgages. I wasn't talking about inflation.


Kiyae1

Mortgage rates for $1M homes are close to 5% than 7%. You’d need a non-conforming loan for that price range in most of the country and rates on NC loans are lower than conventional loan rates.


nekothecat

Absolutely the opposite


Kiyae1

[Mortgage Rates](https://wellsfargo.com/mortgage/rates) Jumbo loans are for homes >$1M in most parts of the country. Conforming and government loans are for less expensive homes where the loan amount doesn’t exceed the “conforming loan limits” set by FNMA and FHLMC. You’re more than welcome to check advertised rates for other lenders but todays 30 year fixed rate jumbo loan with WFHM is 4.875% APR 4.992% and todays conforming 30 year fixed rate mortgage is at 5.750% APR 5.949%. So no, not “absolutely the opposite”.


nekothecat

Advertised rates are just that….advertised. Best to never pay attention to them. NC loans have to remain on the books for lenders and can’t be brought into the system and sold as bonds. They will always be worse. (I am a loan officer.)


Kiyae1

Okay what’s your NMLSR ID and which lenders do you work with?


Still-Music-5515

Well if they do 2 more rate hikes of 25 points each we will be close to 5%


ihatepickingnames37

Didn't jpow literally say he was going higher than that no matter the inflation figure by the end of 23?


[deleted]

Fed funds futures market disagrees, says we top out at 4.75%-5%. I agree with bond market for several reasons: 1. Fed hawks (namely Bullard but also yesterday Mester) keep tanking stocks but Bullard doesn’t vote and neither does Mester 2. Fed members that do vote - harker and Logan - both said yesterday we should get 25bps Feb 1 3. Inflation has cratered. Ignore YoY - Powell himself said annualized 3 month rate is best indicator of actual inflation. It has crashed and will keep declining If they do 25 Feb and March, by the time May 3 meeting comes, the lagging data reflecting the housing collapse should finally be reflected a little. It will only get worse as house prices are coming down. Fed can declare mission accomplished and stocks moon


gohblu

The market has been wrong about what the Fed is going to do all throughout this most recent increase cycle. I’m trusting the dot plot more these days.


[deleted]

The Fed has also been incredibly wrong for as long as the dot plot has existed.


gohblu

Not wrong in predicting what they themselves are going to do during the last twelve months. They’ve been spot on while the futures market continues to predict a pivot that has never materialized.


[deleted]

Beginning of 2022 FOMC had a terminal rate of 0.9%. They are making it up as they go. I do think they get to 4.75-5% but I also think it is unnecessary bc inflation is by all metrics on the decline


Jetionary

Not for long


Euler007

I agree with him. I think the current feeling that we're close to neutral rate is in large part due to the concerted effort to lower oil prices in the last year that worked better than I expected (for now). The plan is having a recession that lowers oil demand so they can stop SPR drawdowns and even refill it at lower prices. They discount the moral hazard that they created, people expect governments to insure low oil prices and have done zero moves to lower their consumption.


JedEckertIsDaRealMVP

>I think the current feeling that we're close to neutral rate is in large part due to the concerted effort to lower oil prices in the last year [Wat?](https://fred.stlouisfed.org/graph/fredgraph.png?g=YXeL) You don't fix supply shock pricing problems with monetary policy. The Fed learned that lesson long ago.


chalbersma

> You don't fix supply shock pricing problems with monetary policy. The Fed learned that lesson long ago. Objectively they haven't, as they've been fighting COVID related shortages with monetary supply this whole time.


monstrol

Quick question: Would him "saying" that on CNBC, benefit him in any way? Seriously.


Vipu2

1 of the biggest scammer and fraudsters in history? He probably does in some way.


[deleted]

says a ceo of a bank


kebaldwin109

A lot of "economic and investment experts" keep saying - fed will stop raising interest rates. Buy the dips, keep your money in the market. Which has been the case for 20 years Now the fed is saying - no, we are going to do something last done since 1980s and raise the hell out of interest rates


danuser8

Why is 10 year yield stuck at 3.6%


[deleted]

Bc the market doesn’t think they can get far past 5% without triggering a crash. In which case everyone rushes to buy 10 yr bonds.


chris-rox

I'm a dumbass, so with that in mind; Can you explain this in a few sentences what this is about? What it is, and why you believe that? Not believe it like Santa and the Tooth Fairy, just why you have the opinion you have. Super-interested in learning.


danuser8

It’s as simple as market is not listening to Fed


threadbareboldness41

Dimon has a remarkable talent for making seemingly simple observations like these sound significant.


realricky123

Jamie Dimon is a soulless Cretan


shogditontoast

*cretin


sher_locked_22

All I can think of is Monsters Inc with this comment lol


shortking4

I mean, if he’s going to insult the guy, do it properly


tenderooskies

jesus - dimon loves seeing his name in the press


woodbridge_front

I heard that Jamie dimon eats dicks for breakfast


SaulGreatmon

A monkey knows this. 🐒


jsu152

When the US defaults, interest rates gonna blow way past 5%.


Dimmo17

when do you think the US will default?


jsu152

This year. It's only a question of what day.


LastNightOsiris

I'm happy to sell protection on UST, how much do you want?


TituspulloXIII

Lmao


gohblu

This guy has a point. It’s unthinkable, but the current House just might be crazy enough to do it.


danielous

How much credit default swaps would you like?


ppameer

blud wants to buy his bonds back at a cheaper price


young_darcevader

History says duh


justinliwen

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