Wall Street banks are notoriously cautious with their language, which makes Daniel Pinto’s recent comments stand out. The JP Morgan Chase Vice Chairman stated plainly that an AI valuation correction is “probable.” He went further, outlining a contagion scenario where this correction drags down the S&P 500 and the broader industry.
Pinto’s forecast is based on valuation models that are flashing red. When companies trade at multiples that require perfect execution for a decade, the risk-reward ratio is skewed to the downside. The banker’s logic is that a “reassessment” is overdue.
The market is already heeding his advice. The sell-off in global markets, from the Nikkei to the FTSE, aligns with Pinto’s prediction of a broad correction. The crypto market’s $1 trillion loss is the early warning system of this broader decline.
This banking perspective adds a layer of institutional credibility to the panic. It is not just Reddit traders or skeptics warning of a bubble; it is the world’s largest bank.
For investors, Pinto’s words are a signal to de-risk. The “smart money” is preparing for a downturn, and the “dumb money” is currently holding the bag in index funds.