‘Most dangerous time the world has seen in decades’: Jamie Dimon gives investors stern warning, worries geopolitics could trigger a ‘deep recession’ — 4 ways to hedge your portfolio

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 Bethan Moorcraft

Dimon issues strong warning due to ‘geopolitics’© Misha Friedman / Getty Images

JPMorgan Chase (JPM) head honcho Jamie Dimon issued a stark warning to investors as geopolitical tensions are reaching a boiling point around the world.

“This may be the most dangerous time the world has seen in decades,” the CEO said in a statement accompanying the bank’s better-than-expected third-quarter earnings.

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased last week to 7.61% from 7.86%
  • Applications to refinance a home loan increased 2% for the week and were 7% lower than the same week one year ago.

House for sale in Millbrae, California.

House for sale in Millbrae, California.© Provided by CNBC

Mortgage rates saw the biggest one-week drop in over a year last week, causing the first increase in mortgage demand in a month.

Total mortgage application volume rose 2.5% last week, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.61% from 7.86%, with points falling to 0.69 from 0.73 (including the origination fee) for loans with a 20% down payment.

Dimon thinks there will be little reprieve in that area in the coming months — warning that inflation and interest rates could remain elevated due to several major headwinds. He also reminded investors that “markets doing well” today is never a reason to assume they will continue to do well.

The state of the U.S. economy

In general, U.S. consumers and businesses “remain healthy,” he wrote in his Q3 earnings commentary — but he did note that “consumers are spending down their excess cash buffers,” signaling hard times.

The bank CEO also reiterated that core inflation (the change in the cost of goods and services, excluding the food and energy sectors) remains stubbornly high — at 4.1% in September — increasing the risk that interest rates will stay higher for longer.

“Persistently tight labor markets as well as extremely high government debt levels with the largest peacetime fiscal deficits ever are increasing the risks that inflation remains elevated and that interest rates rise further from here,” Dimon wrote.

“Additionally, we still do not know the longer-term consequences of quantitative tightening, which reduces liquidity in the system at a time when market-making capabilities are increasingly limited by regulations.”

Those headwinds, compounded with heightened geopolitical risk, leave the U.S. potentially at risk of a slow and prolonged economic downturn — but you don’t have to let your personal finances slide with it. Here are four money moves you can make to hedge against inflation, elevated interest rates and the worst-case scenario of a recession.

Read more: Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here’s how

High-yield savings accounts

One easy way to put your money to work is to stash some cash in a high-yield savings account (HYSA). With an HYSA, you could earn more interest on your money and benefit from greater compound growth than you would with a traditional savings or checking account.

You may also want to consider using other high-yield savings products like money market deposit accounts (MMDA) or a certificate of deposit (CD) to make the most of the current high interest rates.

Treasury bonds

Investing in treasury bonds (or T-bills) can be a great way to diversify your portfolio and protect your money from market volatility. While they may not make you rich, what makes T-bills unique are their safety and ability to appreciate in times of crisis.

“Bonds are providing healthier yields than we’ve seen since before the 2008 global financial crisis,” according to Vanguard. “Higher current yields support a much-improved outlook for bond returns going forward. Higher yields can help reduce risk by acting as a buffer to additional rate increases while also providing a stronger base for future returns if the Federal Reserve begins cutting rates in the future.”

Real estate

Real estate is often viewed as one of the best hedges against inflation for a few reasons. First, there will always be demand for homes and commercial properties, regardless of economic climate. And secondly, property values tend to rise with inflation.

Investing in a real estate investment trust (REIT) is a way to profit from the real estate market without having to buy a physical property (and pay today’s painfully high mortgage rates. REITs are publicly traded. They collect rent from tenants and pass that rent on to shareholders in the form of dividends. You can even invest in REITs that rent out to government agenices like the FBI.

Consider also using an online crowdfunding platform, which allows investors to pool their money together to buy property (or a share of property) as a group.

Alternative assets

Traditional assets aren’t the only way to build wealth. And these days, there are plenty of accessible ways to protect your portfolio when the U.S. economy is shaky.

Consider looking at alternative assets like fine art or wine, which often grow in value over time, or even precious metals like gold, which has retained its stable purchasing power over time.




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