KEY POINTS<\/p>\n\n\n\n
I<\/p>\n\n\n\n
JPMorgan Chase<\/a> President Daniel Pinto<\/a> has vivid memories of what life is like when a country loses control of inflation.<\/p>\n\n\n\n As a child growing up in Argentina, Pinto, 59, said that inflation was often so high, prices for food and other goods spiked on an hourly basis. Workers could lose 20% of their salary if they didn\u2019t rush to convert their paycheck into U.S. dollars, he said.<\/p>\n\n\n\n \u201cSupermarkets had these armies of people using machines to relabel products, sometimes 10 to 15 times a day,\u201d Pinto said. \u201cAt the end of the day, they had to remove all the labels and start over again the next day.\u201d<\/p>\n\n\n\n The experiences of Pinto, a Wall Street veteran who runs the world\u2019s biggest investment bank<\/a> by revenue, informs his views at a key time for markets and the economy.<\/p>\n\n\n\n After unleashing trillions of dollars in support of households and businesses in 2020, the Federal Reserve is grappling with inflation at four-decade highs by raising rates and pulling back on its debt-buying programs. The moves have cratered stocks and bonds this year and rippled around the world as a surging dollar complicates other nations\u2019 own battles with inflation.<\/p>\n\n\n\n Living with pervasive inflation was \u201cvery, very stressful\u201d and is especially hard on low-income families, Pinto said in a recent interview from JPMorgan\u2019s New York headquarters. Price increases averaged more than 300% a year<\/a> in Argentina from 1975 to 1991.<\/p>\n\n\n\n While there is a growing chorus of voices who say the Federal Reserve should slow or halt its rate increases amid some signs of price moderation, Pinto is not in that camp.<\/p>\n\n\n\n \u201cThat\u2019s why when people say, `the Fed is too hawkish,\u2032 I disagree,\u201d said Pinto, who became JPMorgan\u2019s sole president and chief operating officer earlier this year, solidifying his status as CEO Jamie Dimon<\/a>\u2019s top lieutenant and potential successor.<\/p>\n\n\n\n \u201cI think putting inflation back in a box is very important,\u201d he said. \u201cIf it causes a slightly deeper recession for a period of time, that is the price we have to pay.\u201d<\/p>\n\n\n\n The Fed can\u2019t allow inflation to become ingrained in the economy, according to the executive. A premature return to easier monetary policy risks repeating the mistakes of the \u201970s and \u201980s, he said.<\/p>\n\n\n\n That\u2019s why he thinks it\u2019s more likely the Fed errs on the side of being aggressive on rates. The fed funds rate will probably peak at around 5%; that, along with a rise in unemployment, will likely curb inflation, Pinto said. The rate is currently in a 3% to 3.25% range.<\/p>\n\n\n\n Like a string of other executives<\/a> have said recently, including Dimon and Goldman Sachs<\/a> CEO David Solomon<\/a>, the U.S. faces a recession because of the Fed\u2019s predicament, Pinto said. The only question is how severe the slowdown will be. That, of course, is being reflected in the markets that Pinto watches daily.<\/p>\n\n\n\n \u201cWe\u2019re dealing with a market that is pricing the probability of recession and how deep it\u2019s going to be,\u201d Pinto said.<\/p>\n\n\n\n The economic situation this year has been unlike any other in recent history; apart from booming price increases for goods and services, corporate earnings have been relatively resilient<\/a>, confusing investors looking for signs of a slowdown.<\/p>\n\n\n\n<\/a>Aggressive Fed<\/h2>\n\n\n\n
<\/a>Markets haven\u2019t bottomed<\/h2>\n\n\n\n