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As the American stock market anxiously waits for answers about tariffs and interest rates, Daniel Pinto predicts a substantial correction is on its way.

Daniel Pinto, co-president of JPMorgan Chase (NYSE:JPM), has raised the alarm for investors by saying that stocks could fall as much as 40 percent in the coming years.

Pinto, who spoke with Bloomberg TV on Thursday (March 8), predicts that equity markets could see a massive correction in light of recent announcements such as US President Donald Trump’s tariff proposition and expected interest rate hikes from the US Federal Reserve.

“The equity market has some way to go for the next year or two,” Pinto said. “But then, if there is a correction, it could be a deep correction. It could be between 20 to 40 percent depending on the valuations at the time. The most important thing for someone like us is just to be prepared.”

While Pinto also mentioned that having a correction at the end of an investing cycle is normal, he touched on the nervousness that investors are facing as they wait to see what happens next.

“Markets are going to be nervous, nervous about anything that relates to inflation, nervous about anything that relates to growth,” he explained. “These tariffs, if they go a lot beyond what has been announced, it is something that will concern the markets about future growth.”

February was a turbulent month for the US stock market as the Dow Jones Industrial Average (INDEXDJX:.DJI) collapsed into correction territory, falling over 3,200 points over the span of two weeks. While the Dow’s major losses were attributed to a number of factors, fears about inflation and an overheating economy took the spotlight.

The market has since made strides to get back on its feet, but a sense of uncertainty and unease still lingers around the investment space. Along with concerns about tariffs and trade wars, the Fed’s next policy meeting is quickly approaching, and it will entail new economic projections and an expected update on interest rate increases. The meeting is set for March 20 to 21.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

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