Tags: Tepper | Fed | taper | Washington

Appaloosa's Tepper: Fed Won't Taper for 'a Long Time Now'

Wednesday, 16 Oct 2013 08:40 AM

By Dan Weil

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Hedge fund heavyweight David Tepper, founder of Appaloosa Management, says the Federal Reserve won't taper its quantitative easing (QE) for at least three or four months because of the ramifications of the budget/debt ceiling conflict in Washington.

"They're not tapering for a long time now. They really have no choice," he tells CNBC.

What's going on in Washington is "forcing their [the Fed] hand."

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That's good news for financial markets, Tepper maintains. "My basic belief has been when you have large [QE], markets go up."

It appears that Congress will come up with a short-term solution to the debt limit ceiling and government shutdown, Tepper says. But it will "not create the kind of confidence you might quite like. If you get a big, broader budget deal, that would be great, and markets could fly."

The shenanigans in Washington are making it difficult to invest now. But when the antics end, stocks could rise toward an 18 to 20 times earnings multiple, Tepper asserts. "You could have a pretty large increase in stock prices to get there next year."

For now, given "the uncertainty you have [for] three or four months, it may be a little tough for markets to fly up."

Other experts agree with Tepper that the impasse in Washington will keep Fed policy on hold.

"It almost certainly means the Fed won't be tapering this year," Mark Zandi, chief economist at Moody's Analytics, tells the Los Angeles Times.

"The uncertainty will freeze them."

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Related Stories:

Hedge Fund Manager Singer: QE Tapering Is 'Off the Table'

Shutdown Leaves 'Data-Dependent' Fed Flying Blind

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