Although Dimon remains confident in the underlying strength and recovery powers of the US economy long term, he warned that current difficulties will not be over quickly: 'If we are lucky, we will have two more quarters of this, and we will start to see a recovery....It's possible (however) it's going to get worse, and we're in for a tougher time'. Dimon blamed the usual suspects (mortgages, high yield, credit and leveraged loans) for his firm's difficult last few weeks. He also admitted that the cost of 'de-risking' Bear Stearns (which JPMorgan acquired in March) 'has been more expensive (than expected)'.
Finally, Reuters reports that Ladenburg Thalmann analyst Richard Bove is estimating that Wells Fargo could writedown up to $40bn in the fourth-quarter related to its purchase of Wachovia. Bove still rates the bank a 'buy', saying: 'Wells continues to be the pre-eminent bank in this country at the moment, with the best record. It is worth owning'.
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