JPMorgan’s Jamie Dimon Says U.S. Stocks Are ‘Kind of Inflated’

JPMorgan Chase CEO Jamie Dimon on Wednesday said the U.S. stock market is overvalued and explained why he’s a little more pessimistic about the global economy than your average Wall Street insider.

“Asset prices are kind of inflated,” Dimon told CNBC’s Andrew Ross Sorkin in an interview at the World Economic Forum in Davos, Switzerland. (“I’m talking about the U.S. stock market,” he added, “it’s not true for stock markets around the world.”)

U.S. stocks were some of the world’s top performers last year after soaring the prior year as well. The outperformance has been driven by years of a strong U.S. economy, underpinned by a resilient labor market and consumer spending, in the face of elevated interest rates.

Wall Street generally expects the U.S. to continue to outperform this year, thanks in part to the animal spirits expected to be unleashed by President Donald Trump’s deregulation and tax-cutting plans. Dimon, asked Wednesday why he’s “cautiously pessimistic” rather than “cautiously optimistic” about the economic outlook, pointed to elevated asset values.

“You need really good outcomes to justify those prices,” he said. “Having pro-growth strategies helps make that happen, but there are negatives out there and they can tend to surprise you.”

By one measure, Trump is inheriting the priciest U.S. stock market in history. According to a Wall Street Journal analysis, the stock market’s Shiller P/E ratio on the day of Trump’s second inauguration was 44% higher than at the start of Herbert Hoover’s inauguration just months before the Stock Market Crash of 1929 and the onset of the Great Depression.

Dimon’s concerns extended beyond stock valuations. Echoing statements made last week in JPMorgan’s quarterly earnings report, he said he was worried about the long-term risks of bubbling geopolitical tension in Europe, the Middle East, and Asia. Global sovereign finances, he said, were another cause for concern.

“What I’m a little cautious about is the deficit spending,” he said. “It’s a global issue, not just an American issue. And the related ‘Will inflation go away?’ I’m not so sure.”

Dimon seemed to voice support for the Trump administration’s promise to cut government expenses and slash regulations. “Growth is the only real solution to reduce these deficits, to reduce debt,” he said.