housing prices were nearly double their trend growth levels and JPM never even considered a scenario in which they might fall.
If you've been reading this site for a while, this statement shouldn't surprise you in the least. The entire industry, not merely Chase, was under the impression that real estate was going to go up forever. As silly and dangerous as that sounds now, that was the conventional wisdom. It also explains why the obscene loans that we now refer to as "toxic assets" were made. If you thought a property would be worth 20% more in a year, it made a lot more sense to give someone a loan without verifying their income. Dimon characterizes and industry and it was a remarkable admission.
Dimon's mindset is also SOP of the mindset of someone participating in a bubble. We can't go back now, but everyone must learn the lesson so that they don't get caught up again. When EBAY et al were trading at 2000 times earnings, we also had a lot of so called experts not seeing any scenario where that could fall. In terms of mindset, there's absolutely no difference between the way that Jaime Dimon viewed the real estate market and many so called experts once viewed the internet market.
Meanwhile, in current news, the weekly jobless numbers were slightly worse than expected. The first time weekly jobless claims came in at 444,000 up 11,000. There are three types of recoveries, U, V, and W. V is the most successful. U is slower but steady. W is characterized by starts and stops. It's the worst kind of recovery. (in fact, there's an L recovery which is no recovery) The latest monthly jobs numbers and this number are all evidence that we're in a W shaped recovery. That means we're going to be taking steps back all throughout. It's economically painful and even worse for the politicians in charge.
Meanwhile, in the markets, equities are about even. Bonds got whacked toward the middle of the day yesterday but the ten year is showing strength again. It's back down to 3.76% after gaining nearly seven basis points inter day yesterday.