Tags: david tepper | market | bullish | trump | tax | cuts

David Tepper: 'Cheap' Market Should Be Bullish on Trump's Tax Cuts

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By    |   Thursday, 04 January 2018 04:07 PM

Economic guru David Tepper sees the current Trump bull stock market charging ahead to even more record-high milestones.

The hedge fund billionaire is optimistic about the potential for President Donald Trump’s corporate tax cuts to turbo-charge the economy.

The billionaire founder of hedge fund Appaloosa Management told CNBC the market is "almost as cheap as coming into last year."

The Dow Jones industrial average rose above the 25,000 level for the first time on Thursday and other major indexes scaled new records, propelled by strong economic data both in the United States and abroad.

The 30-member blue-chip index crossed five 1,000-point marks in 2017 on the back of President Donald Trump’s pro-growth agenda and solid corporate earnings. It took less than a year for the Dow to add a 5,000-point milestone, which is the fastest since the index was created in May 1896.

"Explain to me where this market is rich?" Tepper asked.

"It's not rich with the tax thing that just changed earnings projections. With earnings forecasts going up and interest rates where they are, how is this market expensive? I don't see the overvaluation. World growth is higher," Tepper told CNBC.

"There's no inflation. The market coming into this year doesn't look rich, in fact, it looks almost as cheap as coming into last year," he said.

The tax overhaul, which Trump signed into law last month, lowers the corporate tax rate to 21 percent from 35 percent, CNBC explained.

Tepper said bond prices are the key indicator of whether the stock market can keep going higher.

"The market can't go down until the bond market gets hit. It's amazing where interest rates are," he said.

Wall Street has started 2018 on a strong note. The benchmark S&P index closed above 2,700 for the first time on Wednesday and the Nasdaq settled above 7,000 a day earlier, Reuters explained.

“We saw Apple doing well, and we’re also seeing energy, which was a laggard last year, do well. The integrated names are gaining interest as oil prices are moving higher,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

Also, strong manufacturing and services sector data from the world’s largest economies provided a bullish tone on Thursday, while other data showed U.S. private employers stepped up hiring in December. Friday will bring the key U.S. non-farm payrolls report.

“As long as you have economic growth and earnings moving higher, there’s still a solid underpinning,” Krosby said.

To be sure, Trump himself took a celebratory victory lap on Twitter:

(Newsmax wire services contributed to this report).

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Economic guru David Tepper sees the current Trump bull stock market charging ahead to even more record-high milestones.
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Thursday, 04 January 2018 04:07 PM
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