Will JPMorgan’s Tom Lee Leaving Herald The Start Of A Bear Market?

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Will JPMorgan’s Tom Lee Leaving Herald The Start Of A Bear Market?
Joe Mabel [CC BY-SA 3.0], via Wikimedia Commons

Could the just-announced departure of Tom Lee, JPMorgan Chase & Co. (NYSE:JPM)’s notoriously bullish chief U.S. equity strategist, also coincide with the end of the Fed stimulus driven stock market bull run?

In CNBC interview this morning, Lee gave no indication of impending exit

Lee appeared on CNBC as early as yesterday morning and didn’t provide a clue as to his departure.  Rather, he talked up the equity market as is his tendency. In the interview Lee said that a construction boom is coming and pent up demand is supporting the bull market.

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“I don’t see why we should be worried about the short term noise,” Lee said. “We should focus on the fact we are in a bull market.”

Lee said he sees momentum from lower oil costs and improving weather helping stocks, and said investors could even look toward stocks that have received short attention.

Lee cites bonds to check growth, but overlooks default risk premium

One measure investors can check to see whether growth could slow to recession-like levels is the long-term yield curve on 10-year Treasury notes and 30-year Treasury bonds, Lee said, forgetting that some bond investors are weighting the risk of default as one reason why rates might rise.  Lee was optimistic regarding the prospects for a recession.  With modest growth expected this year and employment improving, he said, the U.S. does not seem close to falling into another recession.

Had been right during 15 year bull run as markets witnessed historic monetary expansion

Lee had been right much of the time during his 15 year tenure, as he caught a major run in Federal Reserve and government policy for increased spending.  However, as the Fed begins to taper, a delicate operation at best, the bull case for stocks might be more difficult to make.

Vacation likely

According to early reports Lee is leaving the bank and has no immediate plans.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com

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