David Tepper Is "Balls To The Wall" Long (But Unlevered) The Fed

Tyler Durden's picture

Earlier today David Tepper confirmed that virtually everyone is now hypnotized by the biggest fallacy in the history of capital markets: that stocks determine the economy, and not vice versa. Incidentally, this is precisely what the Fed banks on, as confirmed previously by Alan Greenspan, who said on TV that the Fed is far more interested in keeping the stock market artificially high than actually caring about its mandate of keeping unemployment and inflation low. Of course, Tepper couldn't resist but talk his book, and providing the most childish and discredited validation for his bullishness: the Fed will do QE in perpetuity. "Either the economy is going to get better by
itself in the next three months...What assets are going to do well?
Stocks are going to do well, bonds won't do so well, gold won't do as
well. Or the economy is not going to pick up in the next
three months and the Fed is going to come in with QE. Then
what's going to do well? Everything, in the near term though not
bonds...So let's see what I got—I got two different situations: One, the
economy gets better by itself, stocks are better, bonds are worse, gold
is probably worse. The other situation is the fed comes in with money." We are too lazy to do it, because we have done it about one hundred times in the past, but we suggest Mr. Tepper pull up a chart of the Nikkei and superimpose on it all the times Japan launched ever more impotent episodes of QE and FX intervention. How did that work out? Yes, you can devalue currencies infinitely via QE, but that only destroys the real value of assets. And as we pointed out after the latest FOMC meeting, we are now in a new regime, where gold benefits more than stocks on further currency devaluation. Period.

Additionally, as to Mr. Tepper argument that mortgages can still go much lower, we ask: how much did the marginal drop in MBS from 6% to 5% to 4% do to spur mortgages? We hope Appaloosa keeps track of new mortgage applications... which for those who do not are at a 13 year low. How exactly will lack of refinancing stimulate the economy?

Then again, betting on the Fed's desire to make millionaires into billionaires is nothing new for Mr. Tepper who prudently made the call that the Fed would destroy the middle class in 2009 and literally bet the farm on Fed intervention. He is now merely doing what he did then (and the Fed obliged, allowing Tepper to not only not shut down Appaloosa, but make a billion or so in the process). And, after all, what else can he do? Fundamental analysis is now dead, and those who still play by the rules are returning investor capital. The only play left in town is to frontrun the Fed, as Bill Gross has been so proficient in doing, and which is the only trade left. Alas, the only loser from that is 99.9% of America's population. For the sake of Mr. Tepper, we hope the great unwashed don't realize the fleecing they are being covertly subject to, before such time as Tim Geithner and Ben Bernanke are able to secure one way tickets to non-extradition countries.

But yes, once we notice that Bill Gross is going "balls to the wall" on margin and buying MBS again, we will let our readers know - at that point it will be time to frontrun the Fed, aka the involuntary US taxpayer piggybank, again... and again...

Full Tepper interview for those who wish to learn how to talk their books up with the best of them.


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43 Steelie's picture

Thanks for posting this. I was laughing the entire time while watching this morning.

If I was one of his investors I'd take my profits and withdraw every dollar I had invested with him today.

tlil5774's picture

Wow - it doesn't get much more disrespectful than that.........

forgetalpha's picture

Call him childish, but that child made over a billion last year

LeBalance's picture

with analytical ability like his how do you suppose he made $1B last year?  Little kleptocratic boys' club?

eigenvalue's picture

Mr Madoff also made loads of money before he went behind bars.

forgetalpha's picture

The problem with so many readers on this site is that they are so self involved and absorbed that can't see the fact they just missed out on a bull run up in stocks (secular, cyclical, or completely make believe, who cares). In my comment I never mentioned anything about the structural macro structure of the global economy, or anything of that matter.

Again, you may knock his analytical thinking, however did your superior market analysis yield near 100% returns last year. If so, good for you, if not, then stop whining and saying everyone else is wrong when clearly you have been proven wrong. The stock market is the ultimate meritocracy, zero sum, you win or lose, that's it. It doesn't matter how intellectually sound your reasoning is, as long as you have consistent risk adjusted returns, then you win.


Piece of advice, everyone has to stop whining and start seeing past their own biases.

DaveyJones's picture

My comment has nothing to do with your analytical abilities which I am certain are superior to mine. It has to do with whether or not a number of criminal schemes have been revealed and whether they continue in this so called free market system. Your or anyone else's ability to make money in it are irrelevant to that. I apologize for being absorbed or self absorbed with that issue. Last time I checked, a number of people share this concern 

SteveNYC's picture

From the Fed's printing press to Tepper's pocket, you bet! Dilute a piece of every US Dollar in existence, and line the pockets of these fucks. Why not?

Douglasnew's picture

Klepper will be right until he is wrong at which time he will say that he can not possibly be held personally responsible for such a far reaching cumulative meltdown. He has his Billion and will keep his Billion while using OPM until the cows come home. That is why he is so bubbly happy VERKLEMPT!

Saxxon's picture

+1 forgetalpha.  How did your factual message get junked x2?

The name of the game is making $ not being right.  Or said another way, if you are making $ you are right.

justcurious's picture

Exactly!! He didn't get bailed out. He just had the gall to go long all financials when everyone was shit scared.

chistletoe's picture

Going forward from here,

you may find that stocks of companies which have large assets in the ground,

such as Suncor, Consol Energy, and Cameco,

will do as well or better than even gold mines ...

Boilermaker's picture

He's basically right.  The stock market has just become a vehicle to further enrich the rich.  It's nothing more than a mechanism to do so now.

docj's picture

Yep - the oligarchs buy up a couple more islands while the rest of us get shot rioting in bread lines.

All so a bunch of banksters and fraudsters (but I repeat myself) don't have to take a haircut on their bad bets.


Village Idiot's picture

Haines just had a young man on who says that, "the market isn't the econonomy."  He's trading the market.

frankTHE COIN's picture

Tepper is banking on Scotty to beam him and stocks up.

Kina's picture

Who needs an economy anyway. If the Fed can print up the market we can get rich to infinity without any economy.

truont's picture

Indeed!  Here is a picture of a billionaire in Africa, a beneficiary of the visionary Keynesian monetary leadership:


kaiserhoff's picture

+1000   We needed that.

gmrpeabody's picture


At least he can smile.

RockyRacoon's picture

He stole the sign from someone else after stabbing him in the neck with a piece of broken glass.  Same thing happening here but with more subtle weapons.

truont's picture

Tyler is spot on:  "we are now in a new regime, where gold benefits more than stocks on further currency devaluation. Period."

One caveat though:  shares of gold/silver mining companies will also benefit from central bank currency raping.  So you paperbugs who sneer at gold as an investment, go for gold stocks instead.

ZackLo's picture

gold basically can only go up unless bernanke wants to hike interest rates and bankrupt us all over night.


breezer1's picture

raise interest rates would bankrupt the government.

truont's picture

Yup, and what are the chances of that?  1%. 

What are the chances Benny will keep monetizing CONgress's debt?  99%.

Place your bets on the table, please....

Snidley Whipsnae's picture

Astute observation. +++ If the Fed holds down rates, lets dollar continue to sink, gold will continue to go up in dollars.

The Fed is between a rock and a hard place now...and we saw this coming long ago.

Will they do another large QE and totally wreck the dollar?

DaveyJones's picture

caught between a pyramid scheme and a hard place and we're the slaves who have to push it. Hey Moses, can you cut this cord before it crushes me? 

Kina's picture

Funny you should say that. Just got into to three gold miners yesterday and another one today.

SRV - ES339's picture

So you paperbugs who sneer at gold as an investment, go for gold stocks instead.

If you'd rather not take the time to research individual stocks, Sprott Precious Mineral Fund is as good as it gets IMHO... 1 year return is 69% (typically 2 to 3 times bullion).

RobotTrader's picture

Way too many guys fightng the tape.

So many "pros" are short big and getting killed.

I'm just following the bouncing ball, it's not that complicated.

So far, everything has been holding above the 20-day after Investor's Business Daily noted the "follow through day" off the recent low.

SteveNYC's picture

You've copped some flack lately Robo, but essentially, you have been correct. Keep the girls coming though, it's been a drought from you lately in this respect.....

Ripped Chunk's picture

On this site you will always draw flack. It's infested with moronic trolls now.

Robo kills it. Thanks for your analysis and entertainment.

doolittlegeorge's picture

if you're long treasuries you might want to call the "soothsayer."  god forbid if a war breaks out in the Middle East during a "peace process."

Hephasteus's picture

Their not fighting the tape. They are block trading out.


Saxxon's picture

Robo junked x 7 for having the intelligence to follow trends and profit.

RockyRacoon's picture

He is junked for arrogance and ego self-massage, not being right.  People love a winner, but they hate those who flaunt it.  Lack of modesty and humility will get ya junked anywhere, and in life in general.  (I did not junk him... don't care enough.)

tom's picture

Hey, this man is indeed in good position to take home a nice slice of QE pie. You want him not to be happy about it? You thought he had some shame?

43 Steelie's picture

I don't think anyone is faulting him for making money.

It's just amusing to watch such a wealthy man have a seemingly lack of fundamental understanding for the underlying monetary picture.

But as I have been saying, when you have men in their 40s-70s who only have known Keynesianism their whole lives, since that is what made them and their friends rich, it's not difficult to see why they fail to grasp the bigger picture.

Hubris can be a bitch though.  

tom's picture

Trust me I know exactly what you mean. But that's not what I sense from this guy. "You've got to love a put, especially when it's issued by the Federal Government." In other words, when they're giving away money, he'll take it. He's not saying QE is good for anybody but himself.

Hephasteus's picture

I'm so sick of this line of reasoning. There's x amount of gold on the planet. If the US really wants the east to stop pretending it's poor all they have to do is stop pretending they are rich.

This is a complaint about how they won't lie to nth degree about thier gold holdings and print convertibility ratios that are nonsense. It's all it is. It's all it ever will be.


buzzsaw99's picture

Everything, in the near term though not bonds.


The guy is so stupid that he doesn't even know how QE works. I turned off the television after that.

Chemba's picture

so if Tepper is "so stupid", and you're not, how come Tepper is worth $6 billion and your worth the present value of a stream of social security payments?

buzzsaw99's picture

you should have the billionaire kleptocrats line up so you can give them all BJs.

logicalthought's picture

>>...how come Tepper is worth $6 billion and your [sic] worth the present value of a stream of social security payments?<<


Dude, that is the funniest line ever!

Hephasteus's picture

Poor guy. Have you been stuck in a German Comedian school most of your life?

wolfsonite's picture

So, the more money you have the smarter you are???  Are you fu$%ing kidding me? ...when do idiots like you wake up to realize they are being fleeced left and right ... unless, maybe, you're one of the fleecers