JPMorgan's Jamie Dimon voices recession concerns as bearish sentiment sweeps across Wall Street

Yahoo Finance’s Allie Canal joins the Live show to discuss JPMorgan Chase CEO Jamie Dimon’s remarks on the state of markets and the state of the consumer.

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- Well, let's start with the topic animating market sentiment, the recession obsession. JPMorgan Chase CEO Jamie Dimon weighing in on the odds of a recession in his much-awaited letter to shareholders, citing recent bank failures, bond prices, and a bearish market. Now, in his letter, he says, quote, "The market's odds of a recession have increased. And while this is nothing like 2008, it's not clear when this current crisis will end." Now, that same uncertainty echoed throughout the market. Just take a listen.

ANDREW PATTERSON: Our base case as well is still one of recession. We had believed it was likely to occur in the second half of 2023.

STAN STOVALL: It just implies that we are moving ever closer to a recession.

SEEMA SHAH: From the aggregate side, we do think that recession is, unfortunately, going to hit the US economy late in 2023.

ANDREW PATTERSON: Now, how deep is the recession going to be? Very difficult to predict with precision. Any recession is going to be painful.

SEEMA SHAH: This isn't a downturn that we're expecting to rival anywhere close to what we saw for the Great Financial Crisis.

- Well, let's take a deeper look at the commentary from Jamie Dimon and Fed officials, like Neel Kashkari. Joining us now at Yahoo Finance's Alexandra Canal. Hey, Alex.

- Hi, Rachelle. And yes, there seems to be this bearish sentiment sweeping across Wall Street right now when it comes to the possibility of a recession. Bank of America out with a recent note calling a recession a, quote, "slam dunk."

You mentioned Jamie Dimon and his annual letter. Dimon really drilling into that banking crisis, saying how many of the risks were hidden in plain sight, like the rising interest rates that we saw from the Fed. He said the current crisis is, quote, "not yet over and there will be repercussions from it for years to come." But one positive thing that he did note is that this was nothing like 2008. He wrote, quote, "This current banking crisis involves far fewer financial players and fewer issues that need to be resolved."

That being said, we heard from other regulators, like Minneapolis Fed President Neel Kashkari. He said that recent banking turmoil has, indeed, increased the risk for a recession. He told CBS's "Face the Nation" that these recent stresses, quote, "definitely bring us closer," although he did say it's too early to make any predictions about what this means for the future of interest rates as well as the broader economy at this point in time.

And then finally, one data point that I do want to bring up is the ISM's latest Manufacturing Purchasing Managers' Index, otherwise known as PMI. That registered a reading of 46.3, the lowest since May of 2020. Even more worrisome than that is Monday's report marked the first time since 2009 that all 10 subindexes signaled contraction, meaning all indexes registered readings below 50. And we know that whenever investors hear a comparison to 2008 or 2009, there are many jitters. So tough times likely lie ahead here. And even though stocks seem to have essentially canceled a recession in the first quarter, a new JPM note warned that stocks are in a, quote, "calm before the storm." So we'll have to see what this means moving forward.

- We know that Jamie Dimon does like his storm analogies. But even as recession fears loom, what did he say about the state of the consumer?

ALEXANDRA CANAL: Well, the state of the consumer, at least according to Dimon, is particularly strong. And he highlighted several things going on in the economy to really drive that point down. We have spending up. Balance sheets are strong. Businesses are healthy, with credit losses low. And that's on top of a very tight labor market, rising wages. The supply chain, which was a big concern during COVID, that has been recovering nicely.

So, overall, despite these future fears, the economy is healthy. You mention the fact that he likes his storm analogies. And 10 months ago, he did say a hurricane was coming. In this letter, he downgraded that to storm clouds, which could dissipate and be nothing.

But I think what's clouding, no pun intended, an otherwise sunny outlook are these recession fears, is the fact that we have been experiencing this banking crisis. And with rising interest rates and everything going on in the economy, there is this level of uncertainty. So that is something that I think everyone on Wall Street is monitoring very closely, especially these top banking CEOs.

- Indeed. And a lot of shifting sands, even though the geopolitical landscape that he noted, could be some seismic shifts there as well, depending on how these allegiances play out. Great stuff there. Thank you so much. Alexandra Canada for us.