Jamie Dimon, CEO of the largest bank in the United States, JPMorgan Chase (NYSE: JPM)It’s worth listening to him when he shares his concerns about the risks to the economy. For the past few years, Dimon has been saying that geopolitical risk, such as the Russian invasion of Ukraine, is top of mind for him. With the United States now embroiled in a new war in Iran, Dimon was asked what he thought might happen next with oil prices and inflation.
In a March 2 interview with CNBC, Dimon expressed optimism that if the conflict with Iran is brief, it would not lead to a long-term rise in inflation. But he warned that inflation remains a risk that investors are too complacent about at the moment. If inflation lasts longer than investors expect, Dimon said, inflation could be like a “skunk at a party.”
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If you’re worried about the Iran war or other inflation risks, here’s an idea on how to invest.
If the war in Iran causes serious disruptions to oil supplies, such as if Iran shuts down international shipping through the Strait of Hormuz, this could cause gas prices to rise. But other countries can also take steps to keep sea lanes open or increase oil supplies from elsewhere.
Asked by CNBC if he sees a risk of lasting inflation from rising oil prices as a result of the conflict, Dimon said no. He said the current conflict with Iran “will increase gas prices a little. And, I repeat, if it is not prolonged, it will not be a major inflationary blow.”
But crude oil prices are already up about 30% so far this year. If oil prices stay high longer, this could translate into higher inflation across the economy. Even if oil prices don’t stay high, Dimon sees some risk that the economy still has too much inflation built into it.
He told CNBC: “I think there’s some risk that there’s more inflation than people think, and that could be like a skunk at a party if that ever happens.”
Some typical investments to protect against higher inflation are oil stocks, commodities, and utilities. He Vanguard Utilities Index Fund ETF (NYSEMKT: VPU) It’s an easy way to invest for a future of higher energy prices.
This utilities ETF lets you own 67 stocks in electric, gas, water utilities, and more. The fund’s main holdings include major utilities. NextEra Energy (12.2% of the fund), Southern Company. (6.4%), Duke of energy (6.4%) and constellation energy (5.9%).
