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JPMorgan exec thinks stocks could fall 40% in the next few years

FILE - In this Oct. 8, 2014, file photo, an American flag flies in front of the New York Stock Excha
An American flag flies in front of the New York Stock Exchange. The benchmark Standard & Poor’s 500 index has gained about 47% since February 2016.
(Mark Lennihan / Associated Press)

Equity markets could fall as much as 40% in the next two to three years, JPMorgan Chase & Co. executive Daniel Pinto warned Thursday.

His comments come as investors worry over the effect of central banks raising interest rates and rising inflation. “It could be a deep correction,” Pinto, the bank’s co-president, said in an interview with Bloomberg Television. “It could be between 20% to 40% depending on the valuation.”

The benchmark Standard & Poor’s 500 index has gained about 47% since February 2016.

“We know there will be a correction at some point,” said Pinto, who oversees the trading and investment banking unit at one of the largest U.S. banks. He said that markets are “nervous,” and that if President Trump goes beyond what he has already announced on steel tariffs, then investors could react badly.

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The prospect of a global trade war has had markets on edge. Trump’s threats of steel and aluminum tariffs have been met with talk of retaliation in China and Europe.

‘Hurt growth’

JPMorgan Chief Executive Jamie Dimon echoed Pinto’s concerns about tariffs.

“If it continues and it gets worse, then it will hurt growth, it will hurt investment,” Dimon said in a separate interview with Bloomberg Television on Thursday. “It could offset some of the very huge positives we’ve had from competitive tax reform.”

“I think we’re OK for a while,” Dimon added. “One day we will have a recession. I don’t think it will be this year. Could it be late 2019?”

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Last month, Pinto said trading revenue across his firm was on pace to increase by “mid to high single digits” in the first three months of 2018, with a spike in market volatility poised to help Wall Street firms break a three-quarter slump in that business.

Pinto was promoted to co-president this year. The banker has advanced through the trading side of JPMorgan and has helped that business climb to the top of Wall Street. The firm was also the second biggest by investment banking fees last year.

Pinto has spent his entire 35-year career at JPMorgan and its predecessors. Based in London, he was promoted to sole head of his unit in 2014, when Michael Cavanagh left.


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