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It isn’t so much what J.P. Morgan Chase CEO James Dimon said about the economy that made investors nervous, but what he wouldn't say.
In short, Dimon didn't say definitively today that he thought the economy was improving. That is a departure from more recent earnings conference calls. As recently as the third quarter, JP Morgan had predicted that consumer loan losses would peak in the first half of 2010.
Here are a couple of examples from today's conference call of Dimon's equivocating on the economic outlook:
Dimon: “Look, you guys are just as good at forecasting the economy as anybody else. And we’ve seen delinquencies getting a little bit better, we saw credit card spend be up a little bit…..We think loans in middle market are actually starting to level off and we see small business demand actually go up….there are signs of good signs out there, but we don’t know.
That sounded sort of positive, but a few minutes later, Dimon was invoking the dreaded idea of a double dip recession.
Betsy Graseck of Morgan Stanley asked if there was anything preventing JP Morgan from raising its dividend.
Dimon: Not really. I think we’ve said we really want to see a real recovery before we do that because we don’t want to have to do this again, just in case you have another dip down here.
Finally, Calyon analyst Mike Mayo tried to clear things up. “So you expect [nonperforming assets] to go down in mid or late 2010?”
Dimon: “Well, Mike, we don't know when the recovery is.”
Wait. We thought the Fed, the White House, retailers and consumers have all indicated that the recovery is already underway. Does this mean there is still pain ahead in the financial sector and for the broader of the economy?
Jamie, say it isn't so.
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Double Dip Recession….this is hilarious… We are in a depression…lol Wake Up
I agree with Mike. This is rubbish!
Does (*IT) ever end… nope! (*IT) just keeps on a running… business as usual! AP:WASHINGTON) A House committee investigating bailouts of major banks is calling former Treasury Secretary Henry Paulson and former Federal Reserve Bank of New York Chairman Stephen Friedman to testify. The Committee on Oversight and Government Reform says it wants Paulson and Friedman to testify about their roles in the bailout of American International Group Inc. Lawmakers are concerned that officials managing the bailout quietly funneled billions from AIG to banks including Goldman Sachs Group Inc. Friedman is a Goldman director. Republicans also want information from Federal Reserve Chairman Ben Bernanke. Treasury Secretary Timothy Geithner is already set to testify. Geithner was president of the New York Fed at the time.
I agree with Mike. To have a headline “Dimon UTTERS the Unthinkable,” when the lead paragraph states that this post is based on “what he wouldn’t say,” seems to me to be sensationalism rather than fact. It’s almost as if News Corp. had taken over the WSJ, or something.
Yeah, well, he also said that these financial upheavals happen every 5-6 years. Or, maybe that was wishful thinking, Financial upheavals have been berry berry good to him and his buddies.
Deal Journal is an up-to-the-minute take on the deals and deal makers that shape the landscape of Wall Street, including mergers and acquisitions, capital-raising, private equity and bankruptcy. In short, wherever money changes hands. Deal Journal is updated throughout each trading day with exclusive commentary, analysis, data, news flashes and profiles. The Wall Street Journal's Michael Corkery is the lead writer, with contributions from other Journal reporters and editors. Send news items, comments and questions to deals@wsj.com.
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