David Tepper Forecasts the Stock Market
Hedge fund titan David Tepper (Appaloosa Management) was a guest on CNBC’s Squawk Box this morning. Tepper and David Saltzman discussed the charity “Robin Hood Foundation,” whose goal is to alleviate poverty in New York City. Tepper responded to criticism brought up by Andrew Ross Sorkin likening the charity to overly compensated fat cats sprinkling crumbs to the huddling masses to feel better about themselves as, “bullshit.”
Tepper said the Fed wouldn’t be tapering for awhile because of the situation in Washington which could affect confidence. The economy hasn’t been quite at their [the Fed’s] projections, Tepper added.
If the government defaults, even for two days, its a big deal for the middle class, Tepper said. Tepper added things would be much more stable if Congress passed a law that said the debt would always be paid.
Joe Kernen pointed out inflation has been low which has allowed the Fed to pursue their QE policy. The discussion then morphed to the Fed’s balance sheet and whether there would be a “messy exit.”
When asked whether he would rather win a Nobel prize or make $2.2 billion a year, Tepper said “win the Nobel prize, I’ve already done that [made $2.2 billion].”
Tepper said interest rates are lower and will stay lower. 4% interest rates translates to higher PE multiples for stocks in the future, Tepper said. An 18-20 times earnings multiple (versus 14 now) is achievable which would lead to a large increase in stock prices, Tepper stated.
Tepper talked about how the Fed saved the economy from a 1930’s style depression and improved the housing market.
Tepper said they were invested in Europe, but wouldn’t discuss individual names.
Tepper believes the unemployment rate will come down.
Back in May, Tepper made the case for a continued stock market rally and the need for a Fed taper [link].
Tepper and Saltzman discuss Robin Hood Foundation:
Tepper discusses QE and tapering:
Tepper talks about the potential tragedy of a debt default:
Tepper’s stock market forecast: