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Hedge Fund Star Tepper: Fed Guarantees Stock Market Rally

By    |   Friday, 24 Sep 2010 03:11 PM

Many market gurus, such as Marc Faber, say the Federal Reserve’s massive money-printing will push financial markets into a ditch.

But hedge-fund luminary David Tepper, president of Appaloosa Management, sees it exactly the opposite. The Fed’s easing guarantees a rally for the stock market, he told CNBC.

In its most recent statement, the central bank made it clear it will take whatever steps are necessary to support the economy and capital markets, Tepper says.

"What, I'm going to say, 'No Fed, I disagree with you, I don't want to be long equities?'" said Tepper, whose firm oversees $12.4 billion in assets. "We're a bond place, but we changed up to a little bit more equities recently."

The government helped Appaloosa make $7.5 billion last year, as it bought financial stocks boosted by the government’s bailouts.

Either the economy will recover on its own during the next few months, which will boost stocks, or the Fed will pursue further easing, which will help all markets, except bonds initially, Tepper says.

Either way, stocks are headed higher, he says.

While Tepper is bullish on stocks for fundamental reasons, some technicians are optimistic too.

“We’ve moved from August’s extreme volatility to a situation where the market isn’t selling off on bad news and rises much more on good news,” Oliver Pursche, co-manager of the GMG Defensive Beta Fund, told Bloomberg.

“It’s one more reason to be bullish.”

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Many market gurus, such as Marc Faber, say the Federal Reserve s massive money-printing will push financial markets into a ditch. But hedge-fund luminary David Tepper, president of Appaloosa Management, sees it exactly the opposite. The Fed s easing guarantees a rally for...
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2010-11-24
Friday, 24 Sep 2010 03:11 PM
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