Appaloosa Management's David Tepper Warns of Bearish US Stock Market with Fed Tightening
Tepper advises investors to trust the Fed's tightening plans for 2023
David Tepper, the founder and president of hedge fund Appaloosa Management, told CNBC on Thursday that he's bearish on the US stock market due to ongoing central bank tightening.
In an interview, Tepper told the business network that he is "leaning short on the equity markets" and plans to sell bonds. He cautioned investors to trust the Federal Reserve (Fed) when it promises further tightening in 2023.
He said bond investors don't seem to be taking the Fed at its word that it would keep raising rates.
Tepper is not alone.
Lindsey Piegza, Chief Economist at Stifel Nicolaus & Co, told Bloomberg on Thursday that "the market is not buying the Fed's increasingly hawkish position that they are going to raise rates to a higher-than-expected level and keep them there."
Tepper founded Appaloosa in 1993. Here is a timeline of some of the notable activist investments made by the fund:
1997: Buys stake in MCI Communications and pushes for a merger with British Telecom. Stock rises, but companies do not merge.
2003: Tepper Appaloosa Management takes a stake in energy firm Encana and wins his push to change management and stock price rises.
2006: Takes a stake in Delphi, an automotive parts company, and pushes for a restructuring. The restructuring eventually happens, and the stock price increases.
2009: Appaloosa Management successfully pushes for CEO change at Bank of America, and the stock price increases.