Dimon Sounds Alarm on Hidden Leverage Threatening Financial Markets

JPMorgan Chase CEO Jamie Dimon sounded the alarm on leverage in financial markets, warning that hidden borrowing could amplify market disruptions. 'Margin debt is the highest it has ever been,' he told CNBC. The type of leverage Dimon is referring to includes not just traditional margin calls, but also prime brokerage lending, hedge fund leverage, and leveraged ETFs. He noted that while this level of leverage isn't systemically high enough to cause a disaster, it's high enough to increase the chance of market disruption.

Dimon made these comments in an interview with CNBC, where he also discussed the recent failure of AI-focused hedge fund Situational Awareness. JPMorgan was a prime broker for the fund, which suffered steep losses and was forced to sell its public equity portfolio. However, Dimon said that this episode demonstrated that markets can absorb such failures without broader disruption.

Other companies in focus include SanDisk, which is lower in premarket trading after mixed guidance overshadowed better-than-expected quarterly results. The company's fiscal Q4 profit and revenue topped forecasts, but the outlook for fiscal Q1 disappointed. Sandisk expects adjusted EPS of between $44 and $46 per share, with the midpoint just above the $44.72 consensus.