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Star investor David Tepper is ‘leaning short’ on equities: here’s why

david tepper leaning short on equities

S&P 500 is now down nearly 8.0% this month but that doesn’t make the equities market any more attractive for David Tepper – the billionaire investor and founder of Appaloosa Management.

Tepper explains why he’s cautious on equities

The hedge fund manager is dovish primarily because central banks around the world are not just tightening “now” but are also adamant on continuing well into the coming year.

That, to Tepper, does not paint a rosy picture for equities. On CNBC’s “Squawk Box”, he said:

They’re worried about the underlying mismatched labour market. They don’t want inflation to take hold. They’re worried about stuff and I should worry about what they’re worried about. So, I’m leaning short on the equity markets.

Last week, the U.S. Federal Reserve signalled a terminal rate of 5.1% in 2023 with rate cuts “not” on the cards until 2024 as we reported here.

Why else is David Tepper dovish on equities?

“VIX” – the CBOE Volatility Index also returned to 20 on Wednesday, which has been a reliable “sell” signal this year.

Other reasons for Tepper’s cautious view include a potential earnings recession that’s not priced in.

With these interest rates, it’s hard to have a higher multiple. Why [would] I still put these high multiples of like when I had 1.0% rates. I have to put multiples realistically on the market.

Tepper confirmed that he’s holding only small positions in stocks for now. It is also noteworthy that the benchmark index, despite all the doom and gloom, is still up nearly 18% versus the end of 2019 (before the pandemic).

The post Star investor David Tepper is ‘leaning short’ on equities: here’s why appeared first on Invezz.

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