Contrary View: "We Don't Know When the Recovery is"

Most economists and market analysts insist that economic recovery is upon us, and that 2010 will be a stronger year for most countries. I largely agree with this opinion, yet I am concerned that in our desire for conditions to improve we are ignoring data that would indicate another (less hopeful) scenario.

For example, I was struck by both the results and the tone of JP Morgan's fourth quarter and full year results that were released last week. Jamie Dimon has consistently held one of the better views of the world since he took over at JPM, so it is worth listening to his views.

Here's the Reuters report of the Morgan numbers:

JPMorgan loan losses overshadow higher Q4 profit
Fri, Jan 15 2010
* Q4 EPS 74 cents; Street view 61 cents

* Loan loss reserves rise for mortgages, commercial loans

* Investment bank profit still drives results

* Record compensation for investment bank staff

* Shares down 2.1 pct in morning trading (Corrects third paragraph from bottom to name commission)

By Elinor Comlay

NEW YORK, Jan 15 (Reuters) - JPMorgan Chase & Co reported deep losses on mortgage and credit card loans in the fourth quarter, damping hopes that consumer credit is on the mend.

Strong investment banking results helped quarterly profit soar to $3.3 billion, topping Wall Street expectations. But analysts had been hoping for signs that the bank's credit costs were leveling off or even starting to fall, particularly for consumer loans.

"Consumer credit may be close to a bottom here, but it's not getting better, and people wanted JPMorgan to say it's getting better," said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management, which owns JPMorgan shares.

Losses at the second largest U.S. bank were in line with typically cautious guidance the bank had given in recent months but its projections for 2010 were hardly any more sunny.

"We don't know when the recovery is," Chief Executive Jamie Dimon said on a conference call with investors.

JPMorgan is the first of the major banks to report fourth-quarter numbers and its results may bode ill for competitors.

The New York-based bank's overall quarterly profit amounted to 74 cents a share, beating analysts' average estimate of 61 cents, according to Thomson Reuters I/B/E/S. Year-earlier earnings were $702 million, or 6 cents a share.

Revenue, excluding the impact of assets that have been packaged into bonds and largely sold to investors, totaled $25.2 billion, falling short of analysts' average forecast of $26.8 billion.