In what sounds more like yet another warning to President Trump than an actual market call, Daniel Pinto, the head of JP Morgan Chase & Co.’s colossal investment bank (which houses its M&A and trading operations) warned that equity markets could decline by as much as 40% over the next 2-3 years – though he believes the present cycle has at least another year left to run.

Pinto said markets are “nervous” – not just about trade, but also by the prospect of higher interest rates globally (they might receive more inadvertent insight today if the ECB’s Mario Draghi pulls a Jerome Powell and sends markets reeling with a hawkish misstep).

The prospect that President Trump could start a trade war also has investors on edge – and they could dump stocks if the tariffs end up being larger than the market expects, according to Bloomberg.

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A 40% drop would wipe out most of the market’s gains from the past two years.

“There is never just one trigger, it’s a combination of factors and it depends on valuation at the time. The market probably has some way to go probably for the next year or two, but the correction could be 20% to 40%. And for us, we just try to be prepared because during those times, the clients really need you.”

Nonetheless, Pinto says the probability of a recession in the US in the near term is “very low” and the present cycle – in the US, at least – probably has another year before a prolonged downturn begins.

“At the moment the scenario is, the economy will continue growing globally very strongly in the US and everywhere else, the Fed and the other central banks are being very prudent with how they adjust monetary policy, and inflation is moving up but its very reasonable – so those are the things you want to watch: That inflation doesn’t go up to fast, that forces the Fed and central banks to raise faster…you want to look at geopolitical issues that are playing out…and you want to look at geopolitical issues.”

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