Well, when Jamie Dimon of JPMorgan Chase says “Watch out,” it is usually not small talk. In his latest update, he admitted, “You feel stupid when everyone’s coining money and everyone’s great… it does feel really good.”
That pretty much sums up late-cycle psychology. After that deep breath comes the warning. Here you go – aggressive competition, looser credit standards, and some players “doing dumb things” just to create net interest income. Ouch! We have seen this movie before.
He also reminded us, “There’s always a surprise in a credit cycle.” The shock is rarely where people expect it. High asset prices do not comfort him, they increase his anxiety.
That said, I do not have to agree with everything he said. Not every credit expansion ends in disaster, and anxiety is not a timing tool. Markets are probabilistic, and innovation (including AI) can create winners as well as casualties.
Still, when a seasoned banker who has seen multiple cycles pauses and says “Watch out,” it’s probably a cue to stay disciplined, not to panic, but also not to confuse a rising tide with permanent genius.