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JPMorgan CEO Jamie Dimon issued a warning in his annual letter to shareholders that the oil and commodity price shock triggered by the Iran war could lead to persistently rising inflation, thereby driving up interest rates and depressing asset prices.

According to The Wall Street Journal, in this year’s shareholder letter, Dimon listed a rebound in inflation as one of the economic risks that should not be overlooked, pointing directly to “the skunk at the party—possibly in 2026—is a slow rise in inflation.” He warned that this scenario alone is enough to trigger higher interest rates and falling asset prices.

Dimon also made it clear that the enduring threat posed by the Iranian regime’s support for terrorism—which has resulted in large numbers of casualties—“must be addressed appropriately.” In his view, the ultimate outcomes of the wars in Ukraine and Iran are even more important than their direct financial and economic impacts.

Oil Price Shock as a Core Risk

In the letter, Dimon noted that in the coming months, oil and commodity prices face further shock risks, which could trigger persistent inflation and ultimately drive up interest rates. He cited historical lessons, noting that rapidly rising oil prices were a major cause of several severe recessions from the 1970s to the 1980s, though he also acknowledged that the U.S. is currently more resilient to such shocks than it was then.

Against this warning, the financial markets’ sensitivity to interest rate trends has drawn heightened attention to Dimon’s outlook. Now 70 years old, Dimon has led JPMorgan for more than two decades, and his annual letter has long been seen as an important window into the trends of the U.S. financial system and broader economy.

Private Credit Market Risk Accumulation Highlighted

Regarding internal risks in the financial system, Dimon clearly expressed concern over the private credit market.

He predicted that if the economy turns downward, most high-risk credit products will be hit harder than the market expects, citing a significant degradation in underwriting standards among many lenders.

He also criticized the trend of private credit funds marketing their products to retail clients, arguing that this area currently lacks sufficient transparency and appropriate regulatory standards.

“Not all institutions providing credit are good at it,” he wrote, “Many players are latecomers, and the performance of some credit providers can be expected to be much worse than that of their peers.”

Slow Pace of Private Equity Public Listings Questioned

Dimon also questioned the pace of public listings in the private equity industry in his letter.

He pointed out that, given the stock market has remained at historic highs in recent months, it is surprising that private equity institutions, which hold nearly 13,000 companies, have not made more active use of favorable market conditions to push portfolio companies to go public.

“If we do enter a prolonged bear market, it’s hard to imagine what will happen then,” he warned.

Supports Deregulation, Avoids Trump Lawsuit Topic

On policy stance, Dimon signaled support for the deregulation initiatives promoted by the Trump administration, saying JPMorgan plans to help the White House achieve broader policy goals by supporting industries crucial to U.S. military and economic security.

Notably, this year’s shareholder letter made no mention of Trump’s lawsuit against JPMorgan and Dimon personally—a case stemming from JPMorgan closing Trump’s bank account after the January 6, 2021, Capitol riot.

Additionally, in his letter, Dimon made a series of recommendations on topics such as EU reform and improvements to U.S. public education, and criticized high-tax policies in cities like New York, cautioning that no city has a “birthright to success.”

Risk Warning and DisclaimerThe market has risks, and investment must be prudent. This article does not constitute individual investment advice, nor does it take into account the specific investment goals, financial situation, or needs of any particular user. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific circumstances. Investment based on this article is at your own risk. ```