🐺 Jamie Dimon Just Called Inflation "The Skunk at the Party"

Happy Monday. Markets are reopening after Good Friday, and this might be the most consequential week since the war started. Trump's Iran deadline expires tonight. CPI prints Wednesday. FOMC minutes drop Tuesday. And four of the biggest banks in America report earnings Friday. Oh, and Jamie Dimon just published the most bearish annual letter of his career.

Deep breath. Let's go.

S&P 500: 6,611.83 (+0.44%). Dow: 46,669.88 (+0.36%). Nasdaq: 21,996.34 (+0.54%). WTI: $112.61. Brent: $109.63. Gold: $4,676. VIX: 24.17. 10Y: 4.335%. DXY: 99.99.

WAR › Trump's extended deadline for Iran to reopen the Strait of Hormuz expires tonight at 8 PM Eastern. There's been no breakthrough. On Sunday, Trump posted: "Tuesday will be Power Plant Day, and Bridge Day, all wrapped up in one, in Iran. There will be nothing like it!!! Open the Fuckin' Strait, you crazy bastards, or we will open it for you!" Iran has denied any direct negotiations. If the deadline passes without progress, the next escalation could include strikes on energy infrastructure and bridges. The Pentagon has already positioned Special Operations forces in the region, and reports indicate planning for up to 10,000 additional ground troops. WTI closed at $112.61 today.

MACRO › Jamie Dimon released his annual shareholder letter this morning, and it reads like a warning siren. At 48 pages, it's his most alarming yet. He called gradually rising inflation "the skunk at the party" and warned that the Iran war could generate persistent oil and commodity shocks that keep rates elevated far longer than markets expect. He invoked the 1974 and 1982 recessions, both driven by oil-fueled inflation spirals, as historical parallels. On private credit, he noted that losses are already running "a little higher than they should be" relative to current conditions. On Europe: "America needs Europe to succeed, and it's currently on a bad path." On sentiment: "Human nature has not changed. Falling asset prices at one point can change sentiment rapidly and cause a flight to cash."

MARKETS › The S&P 500 snapped its five-week losing streak last week with a 3.4% gain, its best performance in four months. Today it added another 0.44%. That sounds encouraging until you zoom out. The index is still below both its 50-day and 200-day moving averages for the first time since late 2023. Microsoft closed Q1 down 23%, its worst quarter since 2008. The S&P finished Q1 down roughly 4.6%, the worst quarterly performance in four years. A bounce is not a bottom.

EARNINGS › This is bank earnings week. JPMorgan ($JPM), Wells Fargo ($WFC), Morgan Stanley ($MS), and BlackRock ($BLK) all report Friday before the open. Given Dimon's letter today, JPM's call will be the most closely watched in years. Consensus has JPM at $5.31 EPS. Before that, Levi ($LEVI) reports tonight, Delta ($DAL) and Constellation Brands ($STZ) on Tuesday, and CarMax ($KMX) Wednesday. Every one of these tells you something about the consumer, travel demand, and pricing power in a world where oil is above $112.

DATA › Wednesday's March CPI print is the week's biggest number. Consensus expects +0.9% month-over-month headline and +0.3% core. That headline number would be the highest monthly reading since the 2022 inflation spike, driven almost entirely by energy costs. FOMC minutes drop Tuesday and will show how worried the Fed was at its March meeting about the war's inflationary impact. Jobs came in better than expected Friday (unemployment 4.3% vs 4.4% expected), which removes one excuse for the Fed to cut.

Jamie Dimon doesn't write 48 pages for fun. When the CEO of the largest bank in America invokes the recessions of 1974 and 1982 in the same paragraph, it's worth reading closely.

The core argument.

Dimon's thesis is simple: the Iran war is creating an oil and commodity shock that could make inflation "stickier" than anyone expects. And if inflation keeps rising instead of falling, interest rates go higher, not lower. That's the opposite of what the market has been pricing. He called this scenario "the skunk at the party" for 2026.

The numbers back him up.

Goldman Sachs has already raised its recession probability to 30% and revised its year-end inflation forecast to 3.1% PCE. The OECD bumped its G20 inflation estimate to 4%, up from 2.8%, citing the war as the entire reason. Moody's AI recession model sits at 49%, and that was measured before the war started. Oil has roughly doubled since January. Gas just hit $4.12 a gallon.

What's different from his past warnings.

Dimon has been cautious in prior letters, but this one goes further. He flagged cracks in private credit (Blue Owl's OTIC fund saw 40.7% redemption requests in Q1). He warned that "sentiment and confidence can change rapidly" and that falling asset prices can trigger a self-reinforcing flight to cash. And he said the war's effects aren't just about energy. They extend to fertilizers, plastics, and the entire commodity chain that runs through the Gulf.

The positioning takeaway.

CPI on Wednesday will tell you whether the skunk has already arrived. If headline CPI prints above 0.9% month-over-month, rate hike expectations will surge. Bank earnings Friday will show you how JPM, Wells, and Morgan Stanley are positioning their own balance sheets. Pay attention to what they're doing with credit reserves and loan growth. If the banks are building reserves, they see what Dimon is warning about. That's your signal.

Rallies options flow data flagged $11.3 million in QQQ 588 put sweeps for April 17 and $3.37 million in SPY 625 puts for May 15 heading into last week's close. Institutions are hedging into strength, not chasing the rally. With CPI, FOMC minutes, and bank earnings all landing this week, the options market is telling you it expects fireworks.

See the full options breakdown on Rallies →

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