Jimmy Dimon, President of the Great Bank of America, JPMorgan Chase (NYSE: JPM)It’s worth listening to when he shares his concerns about the risks to the economy. For the past few years, Dimon has said that geopolitical risk, such as a Russian invasion of Ukraine, is at the forefront of his mind. Now that America is involved in a new war in Iran, Dimon was asked what he thinks will happen to oil prices and inflation.
In a March 2 interview with CNBC, Dimon expressed optimism that if the Iran conflict is short-lived, it will not lead to a long-term increase in inflation. But he cautioned that inflation is still a risk that investors are a little too complacent at the moment. If inflation persists longer than investors expect, Dimon said, inflation may be like “the skunk at the party.”
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If you’re worried about the Iran war or other inflation risks, here’s an idea for how to invest.
If the war in Iran causes severe disruptions in oil supplies, such as Iran blocking international shipping through the Strait of Hormuz, this could push up gas prices. But other countries could also take measures to keep shipping lanes open or boost oil supplies from other places.
When asked by CNBC if he saw a risk of long-term inflation due to higher oil prices as a result of the conflict, Dimon said no. He said the current Iran conflict “will push gas prices up a little bit. And again, if it doesn’t last long, it won’t be a big hit to inflation.”
But crude oil prices are already up about 30% year-to-date. If oil prices remain high for a long period of time, it can lead to high inflation throughout the economy. Even if oil prices aren’t high, Dimon sees some risk that the economy is still highly inflationary.
“I think there’s a little more risk of inflation than people think, and it could be like a skunk at the party if that happens,” he told CNBC.
A few common investments to protect against high inflation are oil stocks, commodities, and utilities. of the Vanguard Utilities Index Fund ETF (NYSEMKT: VPU ) High energy prices are an easy way to invest in the future.
This utility ETF lets you own 67 stocks in electric utilities, gas utilities, water utilities and more. The fund’s top holdings include major utilities NextEra Energy (12.2% of fund) Southern Co. (6.4%) Duke Energy (6.4%) and Constellation energy (5.9%).
