Tags: Tepper | bullish | stocks | Fed

Appaloosa's Tepper: 'I'm Definitely Bullish' on Stocks

Tuesday, 14 May 2013 11:35 AM

By Dan Weil

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Hedge fund heavyweight David Tepper, president of Appaloosa Management, thinks stocks can extend their gains from the record highs they have reached.

"I'm definitely bullish" on the stock market, he told CNBC.

"The evidence is so overwhelming. The economy is getting better, autos are better, housing is better. The Fed, well, before we get to the Fed, Australia just eased, the ECB [European Central Bank] just eased, South Korea just eased and Japan's in a massive easing mode."

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

The budget deficit is shrinking too, Tepper noted

As for the Federal Reserve, it will have to taper back its quantitative easing — it's now buying $85 billion a month of Treasurys and mortgage-backed securities — so that the stock market doesn't go completely nuts in its ascent, Tepper said.

"If the Fed doesn't taper back, we're going to get into this hyper-drive market," he explained. "It's a backwards argument. To keep the markets going up at a steady pace the Fed has to taper back."

But that will simply smooth the market's rise, he maintained. "Guys that are short better have a shovel to get themselves out."

Tepper said the Fed is adding about $400 billion of net liquidity to the financial system over the next six months, and some of that money is going to find its way into equities.

As for individual stocks, Tepper said he has holdings in Apple, Citigroup and JPMorgan Chase.

Financial commentator James Altucher doesn't share Tepper's enthusiasm for stocks.

Altucher, who says he has been "bullish forever," told Yahoo, "Now is the time to take the pedal off."

The market isn't going to collapse, because the economy is fine, Altucher explained. And eventually stocks are headed higher.

But the market is essentially being dictated by supply and demand now, as Altucher sees it. And "with demand not quite there and supply starting to go up, [stock] prices are either going to stay flat or go down, so I wouldn't be a buyer of the stock market."

Editor's Note:
How You Lost $85,000 During the Last Decade. See the Numbers.

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