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For Jamie Dimon of JPMorgan Chase, being chief executive of the only Wall Street financial institution to post positive returns on its stock year-to-date can not only be a blessing, but also a curse.

As with any great accomplishment, success is often accompanied by a certain level of credibility and respect.Which is why, when Dimon spoke at a presentation in New York on Monday, the investment world was listening intently. Unfortunately, it didn’t like the message it heard.

“Mr. Dimon may have the most negative outlook of anyone in the industry,” Ladenburg Thalmann analyst Richard Bove said, maintaining a neutral rating. “He made two positive comments; the financial crisis is 75% over and will be gone by year-end; and JPMorgan has a very strong balance sheet. But that was it.” Bove, who admits to viewing Dimon as “completely candid” and “much smarter than the average financial company executive,” said it was depressing listening to the savior of Bear Stearns speak. “Mr. Dimon is convinced that the recession is just beginning. Moreover, he feels that this recession will be more severe than any seen in this country for 25 years,” Bove said.

The recession will be driven by problems in the oil, housing, consumer and financial sectors, according to Bove’s interpretation of Dimon’s presentation; there’s also likely to be more develeraging of the financial sector that will result in lower revenue potential and banks that won’t recognize losses fast enough. Dimon said that just about every type of consumer loan will deteriorate in quality, resulting in more losses at JPMorgan’s subprime and prime mortgage businesses, while the home equity portfolio will also deteriorate and credit card losses will grow.

Oppenheimer analyst Meredith Whitney also acknowledged that the credit card industry is headed toward rough days after she met with JPMorgan’s Gordon Smith, head of credit cards. Whitney, who holds a perform rating on shares of JPMorgan, said that Smith noted the company’s first bucket delinquencies are down year-over-year while other delinquency buckets are also seeing increased loss severity. Even though Dimon said Monday that JPMorgan expects credit card loss of about 5% in the second quarter, over 5% in the second half of 2008, and an average of 6% in 2009, Oppenheimer in fact believes the losses will be higher than JPM’s own expectations.

“JPMorgan believes that losses in the second half of 2008 will be mitigated by a higher denominator from a seasonal rise in balances, however we actually believe the opposite will occur,” Whitney said.

Still, as Bove pointed out, JPMorgan’s stock continued to rise Monday, even after the bearish comments from CEO Dimon. “Investors should listen to Mr. Dimon before rushing in to this stock,” Bove wrote. Investors did just that Tuesday, sending the stock down 2.5%.

Shares of Crocs Inc. tumbled in midday action following an almost apologetic downgrade from JPMorgan. The stock was down as much as 10% at its session low, putting it off almost 60% since the start of 2008k, after the firm lowered its rating to neutral from overweight, citing perceived risk to the company’s first-quarter outlook because of market conditions in the U.S.

That all sounds fairly negative but JPMorgan retained a measured amount of optimism, saying essentially that the problem with Crocs is that it’s a volatile name and even a slight misstep will fuel the bear case against the company. “While we do not believe a major miss is coming (our estimate is for $0.42 (eps) vs. management guidance of $0.46), we do think any mention of weaker than expected U.S. sales, even if it is purely a result of the macro environment, will further spook the Street,” the firm told clients. “People are looking for reasons to hate this stock, and they may view a potential slowdown in the U.S. as a foreshadowing of the growth trajectory of the international business.”

The people that “love to hate” Crocs are short sellers of the stock, according to JPMorgan, which says roughly 40% of the company’s float is short. The firm’s downgrade is really just an acknowledgement that the company isn’t immune to a slowdown in consumer spending. “We remain long-term believers in this brand and hope to get involved again in the future, but for now we are stepping to the sidelines until the macro and inventory headwinds play themselves out,” it stated.

Inventory issues still loom in the near-term for the maker of distinctive footwear made from Croslite, its proprietary closed-cell resin, but management of Colorado-based company “seems committed” to reining the growth, JPMorgan said, so the firm’s downgrade has as much to do with the stock’s trading profile as it does the company’s operations. “As anyone who follows the stock knows by now, CROX does not trade on fundamentals,” it said. “15-20% U.S. sales growth during one of the weakest quarters in memory is still a tremendous accomplishment. ” The firm added that if the company is able to meet its estimate for growth in earnings per share of 30% in 2008 and 20% in 2009, then the stock is “clearly undervalued” with a price-to-earnings ratio of less than seven times this year’s earnings.

If anything comes of the Senate probe into the Fed-backed JPMorgan-Bear Stearns tie-up, it’s a higher price-tag on the deal, according to Sanford C. Bernstein analyst Brad Hintz.

Asked about the likely outcome of the investigation, Hintz told Thomson Financial News, “None. Come on, it’s a congressional investigation.”

The one other possible result could be that the price of the deal rises, the former Lehman Brothers chief financial officer said, because the current offer of $10 a share undervalues the troubled investment firm. Hintz has valued Bear Stearns at around $7 billion “in an unpressured environment.”

Now that the Fed is giving brokers access to the discount window, some on Wall Street may be speculating that Bear holders can use that as a bridge to negotiate a better deal, he said. But at the time the deal was struck, Bear was in no position to negotiate better terms.

“The fact the Bear stockholders were able to get what they did is very good,” Hintz said. “When Drexel failed, it got nothing.” Drexel Burnham Lambert Inc. was a major investment bank that failed in 1990 amid felony securities fraud charges relating to its heavy investment in junk bonds. At its height, it was the fifth-largest investment bank in the United States.

In exchange for the headaches related to buying Bear, JPMorgan gets Bear’s prime brokerage, high-net-worth and asset management operations, which Hintz sees as credible businesses for JPMorgan. The former executive countered arguments that the buy will saddle JPMorgan with a floundering mortgage business. “You can argue that the mortgage market won’t be as large,” Hintz said. “But you can’t make the argument that the mortgage market won’t exist. There will be something that will be the equivalent of Alt-A and securitizations.”

And although there are problems in Bear Stearns’ hedge fund business, “its clients will sleep soundly,” once it’s in JPMorgan’s hands, Hintz said.

If consummated, the deal “certainly is a feather in [the] cap for Jamie [Dimon] and a personal disaster for employees of Bear,” Hintz said. Pointing to the Fed’s rescue of Continental Illinois, Hintz noted that some may later ask why the Fed didn’t get some equity in the deal if it turns out to be as “wonderful” for JPMorgan as the Continental Illinois purchase turned out to be for the Fed.

In 1984, the Fed rescued Continental Illinois, the seventh-largest bank in the U.S. by deposits at the time. When no buyers could be found for the bank, and the government feared a failure would cause a crisis that would cripple the entire banking system, the Fed removed the bank’s executives and bought most of the its equity. It sold the last of its stake in the bank in 1991.

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With the ball in the hands of Team Subprime and the final seconds ticking off the clock, Bear Stearn’s players looked dejected. That is, until JPMorgan came off the Bear Stearns bench, stole the ball and drove the lane to finish with a game-winning lay-up. Punk Ziegel analyst Richard Bove, however, sees JPMorgan pulling up for a difficult 18-foot jump shot, not a sure thing.

“Investors believe that JPMorgan is underbidding for Bear Stearns and getting it at a bargain price,” the analyst said. “I do not. Bear Stearns is a deeply troubled company which would have no value if the Federal Reserve had not stepped in to bail it out.”

Bove is, of course, referring to JPMorgan’s acquisition of the troubled New York-based brokerage, which it announced on March 16 at an original offer of .05473 shares, or roughly $2 per share, of JPMorgan stock for every share of Bear Stearns. On Monday, JPMorgan CEO James Dimon quintupled his bid to roughly $10 per share, or 0.21753 shares of JPMorgan stock, in an attempt to appease angry Bear Stearns shareholders and trading partners who reacted negatively to the original deal. Dimon also agreed to purchase 95 million shares of Bear Stearns by April 8, giving it a 39.5% stake in the company, and to absorb the first $1 billion in losses on Bear Stearns’ portfolio with the Federal Reserve backstopping the next $29 billion (down from $30 billion a week ago).

Even at the increased bid, most of Wall Street felt that JPMorgan had struck quite the lucrative deal for itself. Bove, on the other hand, does not.

“The total cost of the transaction to JPMorgan could be $3.44 billion. Based on Bear Stearns’ original number of shares, the cost works out to be about $23.75 per share. Additionally, JPMorgan will report a 12-month loss of $6 billion to combine the two companies,” Bove said. “Add this to the purchase price and JPMorgan is paying about $65 per original Bear Stearns share.”

The Punk Ziegel analyst called Bear Stearns a “fully integrated mortgage company with a number of other businesses” and said JPMorgan certainly doesn’t need the mortgage operation. Nor does Bove feel that JPMorgan needs Bear’s other businesses either, saying that Morgan has a “much stronger” investment banking business and it is better in transaction processing. Bove also rejected arguments that the deal was valuable to JPMorgan in acquiring Bear Stearns’ lavish Manhattan headquarters, saying it is “just another piece of Manhattan real estate that it must rid itself of.”

Bove said the “key jewel” for JPMorgan is Bear’s prime brokerage business, but his understanding is that the business’ best customers have long since decamped to Goldman Sachs and that JPMorgan is going to have to work hard to get those people back.

Still, the analyst is most disturbed by the fact that JPMorgan used capital to buy a company that is losing market share, in a series of businesses that are declining in size, with a top management team that Bove describes as “sclerotic.”

“These same funds could have been used to buy a bank with top management, a solid balance sheet, which was gaining market share, in what is now a sector that is gaining market share,” Bove said.

He said the greatest benefit from the deal that could accrue to JPMorgan is that it may take advantage of accounting techniques that can be used to revalue Bear Stearns assets at par value.

“Finally, expect every aspect of this transaction is likely to be test in the courts with JPMorgan paying the bill all the way,” Bove added. “This is not a ‘lay-up’ at all.”