Tepper: "Fed Won't Taper For A Long Time", "Generally Speaking Market Will Go Up"

Tyler Durden's picture

Back on May 14, when the S&P was at 1651 or 50 points lower, and when David Tepper made his first book-talking, semi-annual CNBC appearance in which he "blessed the market and awaited the manufacturing renaissance", he made two points about the taper: it's bullish no matter what, namely its removal would mean the economy is improving (we now know it isn't thanks to the Fed and Q4 GDP estimates which are rapidly sliding to 2% or lower), while a taper staying put would mean the Fed would continue pumping stocks higher artificially indefinitely. Today, he did a repeat appearance, in which in addition to the usual market pumping rhetoric, everyone was most interested in how he would spin the recent stunner by the Fed which effectively made the taper a 2014 event. His take: "The Fed won't taper for a long time... So that's definitely sort of going to be a push-up to markets." Couldn't have said it better: but to paraphrase - Taper is bullish no matter what; No Taper is bullish-er.

Because once again, stripping all the rhetorical spin, Tepper once again admitted what even the Treasury has made clear: the stock market is nothing but a causal reflection of the Fed's linearly, and perpetually, growing balance sheet.

Tepper also preaches a 20x PE multiple as his fundamental guideline, which as everyone knows, Fed-induced multiple expansion in an environment in which neither revenues nor earnings are growing, is the only permissive factor for an ongoing market ramp. But why not 30x, or 40x or 50x? After all, since the Fed's balance sheet will hit $5 trillion at the end of December 2014, that implies roughly 2600 on the S&P, or a 26x multiple. Expect this talking point at the next Tepper appearance as he continues to guide his P&L multiples ever higher.

So what is the consensus gospel of which Tepper has become the main spokesman? Why the same one that everyone else, by implication, is so well aware of: the removal of the US default threat. "It looks like they may have a relatively short-term deal, which is going to 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." Because it would mean unlimited monetization by the Fed for the indefinite future. His plea to Congress: don't default, but not for us, do it for the average guy. Obviously ignore that people like Tepper would be wiped out. That's completely irrelevant.

It is deep thoughts like these that explain why Tepper is richer than you.