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Tepper's "Balls To The Wall" Reappear, Lead To "Explosion Of Greatness"

Tyler Durden's picture




 

Everyone's favorite bull made another magnificently arrogant appearance on TV this morning. Following his recent CNBC embarrassment, Bloomberg TV interviewed the outperforming hedge fund manager this morning - during which he explained his 'where else ya gonna go' bullish stocks thesis. From expectations for an "explosion of greatness" in the US to his gratuitous flirtation, he appears to have the inane ability to use many words where few are needed and his bullish thesis has the ring of any and every guest pumper (with nothing new to add): the same supposedly 'low' multiple, central-banks-are-printing, and wide spread between bond and equity yield argument that everyone's mom can explain. From expectations for the 'great rotation' from bonds to stocks and his 50%-upside prediction in Citi, Tepper is "balls to the wall" the best guest ever on any stock-touting network. However, one little thing gets in the way - the last time the Great-and-Powerful Tepper appeared so overtly bullish of stocks (and financials specifically), he also was dumping his holdings into the rally that followed. 

 

 

Tepper on what he's going to do this year in terms of investing:

"I am going to come out of the closet right now… we are bullish. David Tepper has never been bullish."

On why he's bullish now:

"Everything lines the right way. I am saying that for someone in my office because we play Scrabble and he hated the word I used last night…If you look at the markets, they are trading at a really low multiple. 13 handle this year, 11 handle next year on the S&P. You have unprecedented money creation here and you have Japan who went to 2% target last night. You basically have the competing assets. Junk, rallied already 40 basis points this year to 567bps or some ungodly number like that. If you look at the multiple on that compared to the alternatives to anything in credit, there's nothing close. There's never been this big of a gap in the history of my life at least."

On why now is a good time to be long:

"Listen, you're sitting here in a 2% to 3% growth situation. You have some very interesting news last week. The Republicans are not going to play with the debt ceiling. If they pass legislation on Wednesday, you probably have five months of relative quiet. So three months extension plus two months they can play games to extend it further. You really have a little bit of change in attitude that you will probably not have a debt ceiling fight. There is no major negative. You have these earnings, this money growth. You have the Japanese coming on top. There is no other choice out there. You really have not had this money supply push on a relatively good economy. I do not think it is really a steaming pile of garbage, using the G word instead of another word."

On when we'll see the shift from credit into equities:

"You saw some of the shift into equities earlier, mutual fund flows. I know people are looking for this great shift. But you don't have to have the shift. You just have to have all new money going into stocks…People make money, they invest money. There is incremental money that people save. The shift will be in new money. And there will be a shift in old money. Pension managers and others are really off sides in how they are set up. Whether you believe a Goldman Sachs report that they're underweighted by under 20% in equities, which is just huge. Insurance companies underweighted in equities. Just incredible underweights. So I think either you will have a shift or you will see all incremental funds move into the equity market over the course of this year. And then I think you will have a retail shift this year too at some point."

On the credit market:

"It is tight. You know, I have shorted tight markets before. I have shorted full markets before. I do not want to take off my clothes on TV because your viewership will go way down if I do that. I think you will get tighter. You will go very full to extreme value in credit. We have traded before in credit at 200 handle in the junk bond index. We're probably still in 400 handle. There is room to move there. I don't like it because of the absolute yield. I do not like it because I do think it is a full market and I don't like it because I think equity will give you a bigger return. If you short that you do it at your own peril. I think you can still make money of it. There is so much cash out there. People need incremental return and they're not going to get into the Treasury market. They will not get in mortgage market. There will still be moving in the credit markets, but it is by far inferior to the equity markets. Not even close."

On whether Europe should trade tighter than the U.S.:

"Look, it's a credit by credit situation if you're talking about corporate credits. It doesn't make sense for Europe to generally trade tighter than the U.S in anything. This country is on the version of just an explosion of greatness. Do you like that? Explosion of greatness. I told you, I am like a big Charlie Daniels band right now. Everyone to listen to the song 'America' by Charlie Daniels…It's a great song."

On how Appaloosa started:

"I left Goldman Sachs. I was thinking about going to another Wall Street place. I didn't want to do that. That was crazy. After you work on Wall Street it's a choice, would you rather work at McDonald's or on the sell side? I would choose McDonald's. Over the sell side."

On why he likes Citi:

"You can look at the earnings estimates on Citi. We think it has potentially 50% upside from here. We think, listen, if you ask JPMorgan, come get Jamie Dimon on the phone. Ask him if there's one franchise to like to buy in the whole world. Get him to be honest. He will say Citi's foreign business. It is unique. He cannot get into it."

On what's so unique about Citi's foreign business:

"It's steady, growing in the right places in the world. You don't have a lot of continental Europe. You're a lot in Asia and other places that are very good. Mexico.  It is a very nice business there. When you talk about any one of our individual investments and our biggest investment, they are just not that big. Citigroup is 2% or 1.5%."

On whether he values liquidity:

"Yes. I value liquidity a lot. We do like liquidity. There's a measure of liquidity and I think it's not valued in the marketplace enough in general. We do like liquidity, although you have to realize that Appaloosa historically is 60% long term gains. We are long-term holders. But I value the liquidity. I value it because I was a head trader at Goldman Sachs. In 1998 i found out what liquidity was all about. There have been other things. These once in one hundred sort of things seem to keep happening every seven or eight years. I value the liquidity in that respect. I am a little more willing to be in bigger positions right now because I think it's safer right now. I think the main thing right now is to be long equities."

On whether he would go into structured credit:

“We are big CMBS players. We have the biggest book of CMBS subs. One of the biggest of books on the Street right now. It has a lot of upside. It's a big investment for us, but it has tremendous upside. We have things in structured credit. I am willing to put some money, but I am not willing to put 50% of my book in that."

On going long subprime last year:

"We were long subprime. We are a big fund. We have a lot of sh*t in there. Is that a bad word for Bloomberg?"

 

"I think there is probably more to go there [in the mortgage space] again because I thought there was more to go in all credit. There's probably more to go in some parts in the mortgage space because it's cheaper than corporate credit. I think money will find those spots that are cheaper. CMBS is cheap to corporate, equity is cheap to everything."

On playing the lead role in his high school performance of Bye, Bye Birdie:

“I actually played the father. I used to go around singing Conrad Birdie's part, ‘One Last Kiss’…[Tepper sings]…that is not my role. That was it, just like that. That was not my role though. I am not Conrad Birdie.”

On what he would have done with his life if he did not end up being a professional investor:

"As a matter of fact, McDonald's. I tried to get a job at McDonald's. I couldn't get a job. They would not hire me. It was a problem to get a hairnet over the afro."

 

"I always said when I grew up I would be a social worker. In some respects, I really do like some of the philanthropy stuff. I like getting out there and helping people. That is probably what I will do after Appaloosa I think."

On his biggest regret:

"I wish I would have used Rogaine earlier."

 

"Probably the biggest mistake we made was in '98 when we lost money in Russia. We did not understand how fast the markets could get illiquid and how dangerous it was to have concentration in some positions. That was one of the reasons we ask about concentration it is easier to get in than anything. It's sometimes hard to get out. In Russia we moved real fast but not fast enough to not have a loss. We thought that Russia was going to devalue and not default in '98 and I was wrong. That was a huge mistake. We were down some 20% in '98."

On how Appaloosa got its name:

"When we started Appaloosa we were going to name it Pegasus because everyone was using Greek names. We filed the name. We paid $300 and they said you cannot use it because it is taken. Pegasus Funds. Then we said Pegasus is kind of a horse. We did not want to be the Unicorn Fund. So we pulled out a horse book. We still have the horse book and the second name in the horse book was Appaloosa and we chose Appaloosa. The reason we did the A's--when we started things are sent out by fax. There wasn't email. If you were in the A's you had a half hour advantage compared to others at the end of the alphabet and you could trade if you were a small fund. So that's what we did."

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Tue, 01/22/2013 - 16:18 | 3176644 Say What Again
Say What Again's picture

Reminds me of my ex-wife.

I would ask her what we should do in the market, and then I'd do the opposite.  Worked every time.

Tue, 01/22/2013 - 16:22 | 3176654 Pladizow
Pladizow's picture

Tylers: Lay off the Haterade!

Tue, 01/22/2013 - 16:26 | 3176668 Say What Again
Say What Again's picture

There's something funny going on in the market.

No really....

Starting at 3:20, the $TICK has been printing significant gaps at the "seconds" interval.

Tue, 01/22/2013 - 16:51 | 3176747 Say What Again
Say What Again's picture

More strange stuff...

At 12:44 SDS is trading at 49.36, when suddenly NASDAQ prints trades at 49.41 "Above Ask"

Why did NASDAQ go up the book by 0.05 when there was plenty of offers at 49.36 ~ 49.37?

Did NASDAQ declare "Self Help?"

Tue, 01/22/2013 - 17:04 | 3176804 Pinto Currency
Pinto Currency's picture

 

Sporting a silly smirk like that usually portends a nasty surprise to the downside.

Short Tepper.

Tue, 01/22/2013 - 17:07 | 3176813 francis_sawyer
francis_sawyer's picture

Balls to your mouth [& wait for the EXPLOSION OF GREATNESS]...

Tue, 01/22/2013 - 19:14 | 3177197 fourchan
fourchan's picture

he will be distroyed when reality reasserts itself.

Tue, 01/22/2013 - 16:26 | 3176671 slaughterer
slaughterer's picture

Tepper's fund is performing very well.  But I am more interested in what Bob Janjuah has to say.  Bob said he expected that we would rally to 1500, but after that crash.  I wonder if he still holds this view.

Tue, 01/22/2013 - 16:20 | 3176648 youngman
youngman's picture

I watched it...it was a very strange interview....I thought he was going to jump the woman interviewer for awhile....just weird....and he handles money

Tue, 01/22/2013 - 16:21 | 3176655 Say What Again
Say What Again's picture

Maybe they should administer a drug test on this guy.

Tue, 01/22/2013 - 16:23 | 3176659 Pladizow
Pladizow's picture

"....he was going to jump the woman ...."

Sounds like something your avatar would do.

Tue, 01/22/2013 - 16:49 | 3176742 youngman
youngman's picture

I give good nose.........lol

Tue, 01/22/2013 - 16:36 | 3176700 chubbyjjfong
chubbyjjfong's picture

I agree.  A very unconfortable interview to watch.  Obvious flirting with each other and talking about oneself in the 3rd person makes me want to eat my own shit.

Tue, 01/22/2013 - 17:24 | 3176891 DR
DR's picture

He does enjoy Pump and Dump....

Tue, 01/22/2013 - 16:23 | 3176653 falak pema
falak pema's picture

sounds like the Gen Patton of WS! 

So he is going to take Berlin on his own...no bears as prisoners! 

Tue, 01/22/2013 - 16:22 | 3176658 LongSoupLine
LongSoupLine's picture

Fuck you Tepper, eat shit you fucking asshole.

Tue, 01/22/2013 - 16:42 | 3176719 Id fight Gandhi
Id fight Gandhi's picture

Wish someone on TV would say that.

Tue, 01/22/2013 - 16:25 | 3176666 Dr. Engali
Dr. Engali's picture

God I can't stand to listen to somebody so full of themselves. I feel like I'm watching Cramer being interviewed  on Bloomberg.

Tue, 01/22/2013 - 16:57 | 3176770 knukles
knukles's picture

1.)  Ego is the substitute for God with the impossibly arrogant and self centered.  Interestingly, it makes no difference whether one believes in God or not, nor whether God actually exists, for the destination is the same.  Destructive self-centeredness.

2.)  I have become jaded with respect to Investment Managers appearing on the telly.  Are the fees they collect not recompense for running other people's money?  Or are they compensated for self-salving their very own egos in public, hoping that false adulation bestowed by the press in search of ratings is mistaken for grace and knowledge.

 

(oh, come on, you know I'm talking to you...)

Tue, 01/22/2013 - 19:22 | 3177215 Blues Traveler
Blues Traveler's picture

Excellent Knuckles

Tue, 01/22/2013 - 16:27 | 3176677 kevinearick
kevinearick's picture

Diagnosis: Mass Murder by Californication

Wingo: Robert A Caro’s intriguing account of the events of November 12, 1963 demonstrates President Lyndon Johnson’s almost chameleon-like ability to adapt to whatever course of action best suited his purposes. His entreaty to President Kennedy’s aides…to help him continue Kennedy’s legislative goals, because, as he said, “I need you now more than President Kennedy needed you.”…sitting with us in a cordoned off area of the hotel bar, Johnson explained that all he wanted to do was to ensure Kennedy’s legacy on civil rights, space exploration, and other cherished programs of his short-lived Presidency.

///

And what do we get…captive presidency, war on everything, and acceleration of psychologically induced economic arrhythmia, resulting in deconstruction of the US Constitution, elimination of free speech, and liquidation of the greatest empire ever built. Great job guys, the Truman Doctrine and reaction, on steroids.

Labor has never and will never build its priorities on a foundation of majority vote, but keep on voting for the energy dollar and expect a different outcome. Labor votes with the education of its children.

Gopnik:  the Golden Forty-Year Rule. The prime site of nostalgia is always whatever happened, OR IS THOUGHT TO HAVE HAPPENED, in the decade between forty and fifty years past.

Golden: If he tells us the truth and offers real solutions to oil dependence, perhaps he will find we can handle it. (Tell that to Boeing and Microsoft in your own back yard.)

Hytner: There is an emotional void there, which he can fill only by buying people’s friendships. You can empathize with a fool who can only imagine human relationships in terms of what he is able materially to give. And he’s involved in a world which is completely, bizarrely, startlingly like the world we live in.

Wiedman: On the long march to equality…there wasn’t anything romantic about it…at least now we can file jointly. The Marriage Equality Act has boosted various sectors of the economy…Cold War Femme: Lesbianism, National Identity, and Hollywood Cinema…What’s So Gay About Money? It’s pure economics.

///

The Illuminator prepares for school shootings, responds in scripted horror to their frequency increase, continues to push everyone possible into the education black hole, and accounts for the economic activity as GDP growth. The opportunity cost of recognition delay causes the herd to follow its common denominator leader off the cliff.

This is the weakest population of Americans in its History, but some Americans are correspondingly stronger, which is why the Fed finds itself trapped in the catch-22 of its own design. It must replace labor, but it requires labor to live, and labor does not suffer from the illusion of History, time dependency, so the Fed aims and shoots, itself.

The majority is relatively impotent, addicted to the past and incapable of change. From this side of the demographic tipping point, the minority is going to produce the majority of children. That is reality, and there is no upside to caring about a majority that does not care for itself beyond its possessions and associated something-for-nothing, ponzi job credits, guaranteed by the Fed.

Heal ThySelf Economist…and in the meantime leave my kids be, or don’t and suffer the consequences. Weather oscillation is increasing, debt is out of control, and the only people accepting the majority’s definition of labor is the majority. Adjust to the weather; define labor for yourself and you escape gravity. Trade surplus for surplus, liquidate and defer.

San Francisco is just the design side of the top-down box. What happens at the fulcrum with sufficient weather oscillation?

Tue, 01/22/2013 - 16:32 | 3176690 optimator
optimator's picture

I'd rather see an transcript of Johnson's talks with his ex neighbor, John Edgar Hoover!

Tue, 01/22/2013 - 16:50 | 3176751 kevinearick
kevinearick's picture

He probably warned Johnson about Truman's CIA...and the divide and conquer positive feedback rolled on...

Tue, 01/22/2013 - 16:28 | 3176678 optimator
optimator's picture

That's what CNBS is for.  Those "Guests" probably pay good money to broadcast their message.

Tue, 01/22/2013 - 16:28 | 3176681 Nid
Nid's picture

Ridculous overuse of the new favorite term of all Wall Street doosh bags....."Handle".

Tue, 01/22/2013 - 16:32 | 3176688 Jason T
Jason T's picture

right off the bat, I'm prejudging and I know that's wrong.. but this guy sounds like an arrogent dick.  I love to debate guys like this though...

Tue, 01/22/2013 - 16:50 | 3176752 youngman
youngman's picture

and they always end the debate with..... .."I made more money than you"

Tue, 01/22/2013 - 17:10 | 3176809 knukles
knukles's picture

I have had the great honor to have worked with many a successful equity manager... and they all seem to be pressed out of the same mold.
Arrogance.
As if their firmly held belief systems as to the inevitability and significance of the greatest discounting mechanism ever devised by man, which they themselves have conquered by their very own intellectual self collected gifts, are so very superficial and insecure that they must tout, worship their very own existence.
They arrive at their own destination, believing their own propaganda.

Indeed, perhaps the finest collection of psycho and sociopaths ever assembled.

And working with/for these people is a dismal chore.  Sad, brutal, inane and perhaps neurosis inducing as reality is evaded, replaced with Cabinets of Curiosities and Illusions Galore.
Respect for such people is in great shortage.  Except by the gullible  folks in their immediate employ.

Like watching Housewives of Beverly Hills to Build Character and find  Moral Inspiration.

Tue, 01/22/2013 - 20:01 | 3177330 FoeHammer
FoeHammer's picture

Excellent observation.

 

I don't have any experience with star managers but I can surely say that back office operations is also filled with ego-pumping fakes.

Tue, 01/22/2013 - 16:34 | 3176694 Village Smithy
Village Smithy's picture

What do these "great rotation" theses floaters have to say about what would happen when everyone rushes to the equities side of the boat and treasury yields spike. Bye bye millions more homeowners, municipal gov'ts, well basically anyone who can't print their own money. At least the 1% of Americans that have some savings would benefit.

Tue, 01/22/2013 - 16:47 | 3176740 kevinearick
kevinearick's picture

They are hoping, again, that China can float municipal money printing as the preferred solution, and make money either way, as usual.

Tue, 01/22/2013 - 16:36 | 3176702 docmac324
docmac324's picture

I smell a setup, bait and switch.

 

Tue, 01/22/2013 - 16:41 | 3176713 lemonobrien
lemonobrien's picture

don't fight the fed...

 

http://www.youtube.com/watch?v=I4s0nzsU1Wg

Tue, 01/22/2013 - 16:47 | 3176727 Smegley Wanxalot
Smegley Wanxalot's picture

If you know something that will make you money and others don't, you don't go out to shout it from the rooftops; you use it to make your money. Whatever it is you do shout from the rooftops is only what you want the sheep to believe because it makes you money - something like ...

"HEY SHEEP!  DON'T GET CAUGHT OUTSIDE ON A COLD NIGHT!  GET OVER HERE IN THE SLAUGHTERHOUSE WHERE IT'S NICE AND WARM."

Tue, 01/22/2013 - 16:49 | 3176741 Spanish Lizard
Spanish Lizard's picture

What I got from this is - I am a cool and awesome dude, you should sleep with me, look at me I am rich, hi mom I told you being full of myself would work for me

Tue, 01/22/2013 - 16:51 | 3176749 ZippyBananaPants
ZippyBananaPants's picture

correct me if im worng but i read where the senate is not going to pass the house bill on the debt roof because it will require them to pass a budget.  

Tue, 01/22/2013 - 16:52 | 3176758 Smegley Wanxalot
Smegley Wanxalot's picture

No sweat.  The requirement for the Senate to pass a budget never stopped them from simply ignoring to do so before.

Tue, 01/22/2013 - 16:56 | 3176772 ZippyBananaPants
ZippyBananaPants's picture

So you are saying they will pass the hike agreeing to pass a budget, and then never pass a budget?  What a bunch of tools!

Tue, 01/22/2013 - 17:13 | 3176835 knukles
knukles's picture

Who really cares anymore?

Tue, 01/22/2013 - 16:50 | 3176753 lizzy36
lizzy36's picture

Usually an "explosion of greatness" ends with a cigarette. Not a bald super-douche trying to fuck a pregnant "anchor"

But i guess this is the new normal.

Tue, 01/22/2013 - 16:52 | 3176755 ratpack1968
ratpack1968's picture

I love this sight and read it every day, but really...he and his kind have been right for 5 years and most everyone expecting economic armageddon here have been dead wrong.  Sometimes it pays to play the trend.  Just sayin'.... (my god, did I just post that on here?  Did I drinketh the KoolAid from thy Bernanke cupeth?)

Tue, 01/22/2013 - 17:05 | 3176790 DeadFred
DeadFred's picture

In those four years there has been ramp upward that has stayed within very strict bounds. Now at the top near the absolute resistance boundary he is bullish to the max. Nah, he knows this is the top and he needs suckers to offload his positions to. This is a time to SELL not buy and only a delusional momo would get in now.  If you want  to be a bull try in a couple weeks or a month not now. We are at the top.

Tue, 01/22/2013 - 17:21 | 3176861 knukles
knukles's picture

Not so fast, rat.
For the last 5 years, munis (long CA, btw in this chart) have outperformed the S&P .... and both left in the dust by gold.

Nope, been best to be in PMs or if cannot do so by client prescriptions (income needs, percentage limitations, etc.) then a combo of munis and PMs.

Now, the other trick being used of late is to measure returns with a note of "over the last x years" where it is undisclosed that "x" represents the absolute rock bottom of the equity markets ....
A nice little time honored investment manager and broker trick, showing a blank canvas and letting the viewer fill in his own misled impressions.

 

The relative performance has had nothing to do with an end of the world versus everything's great like the old days choices.  Simply been risk adjusted returns reflecting current environment.

Tue, 01/22/2013 - 17:54 | 3176980 John Law Lives
John Law Lives's picture

What have they been right about?   The market going higher?  Did ZH advise you to short the market over the past ~5 years? Are you also ignoring the explosion to the upside in the federal debt level, the explosion to the upside in the Fed's balance sheet, and the explosion to the upside in Food Stamp participation over the past ~5 years.  Do you suppose those trends have no consequence?  The sad reality is equities have been pumped by the extended spending binge the US is on.  Extended spending binges tend to end badly.

Tue, 01/22/2013 - 16:53 | 3176757 topspinslicer
topspinslicer's picture

where else ya gonna go to get a good financial raping I ax ya?????

Tue, 01/22/2013 - 16:56 | 3176765 galis
galis's picture

off topic but...... on the Israeli election tonight

a change in the political resolt !!!

the pulls shows a drop in the likud party of pm Netanyahu from 28 to 18 !!

the left -center have a blocking power to a new coalition

only early resolts, final resolts tommorow morning

Tue, 01/22/2013 - 16:59 | 3176782 galis
galis's picture

the new winner Yair Lapid - center with domestic agenda - took 19 electorats

Tue, 01/22/2013 - 17:29 | 3176903 Downtoolong
Downtoolong's picture

'where else ya gonna go' bullish stocks thesis

So that's what they get paid the big bucks for. Sounds more like desperation than a strategy to me.

Tue, 01/22/2013 - 17:29 | 3176905 ebworthen
ebworthen's picture

The precise kind of prick who deserves a tragic downfall.

Tue, 01/22/2013 - 17:50 | 3176967 khakuda
khakuda's picture

He is just capitalizing on the insanity of central banks.  It's a money printing festival that will push asset prices up at bubble trajectories.  All is well until the crash comes, financial and human capital misallocation become blatantly evident and the fingers get pointed elsewhere once again.

Rinse and repeat. The money printers remain in charge, having caused nothing but bubbles in the past, they are doing the only thing they know how to do.  Tepper is just smart enough to play the game well to get wealth transferred to his ledger during the process.  As annoying as this clip was, one can't blame the guy.  He will get richer as the price of everything rises and kills lower income people.  TPTB don't care.

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