David Tepper: Fed Betting 6% Unemployment Inflation Trigger

"The Fed is taking a chance that 6% is where you start triggering inflation. I don't know if that's right. The question is do you trigger at 7%. the big concern is ... that you're going to get inflation sooner [but] remember it's very hard in this economy to have inflation when you have a high employment rate. I'm not concerned until somewhere in the 7s ... On the way to inflation, you're going to have another ... inflation in asset prices."

"If you waited for them to do the LTRO in Europe  then you invested, in December, and you invested fast, you could take a lot of money. So we made a lot of money on that first move. Then it comes into April and the economy looks like it's going to be slowing. A week before the Greek election, put vols were at 13. They basically said to me, 'hmm we're not concerned about Greece, we're not concerned about the economy. why don't you have these put calls they're really almost for free.' We bought puts so we didn't have a loss in that drawdown. Again, we get into the next time, and Draghi is talking about this, that the other, talking about this put and boy he gave away this put ... we got invested. and that worked too. Then we got to this election and we said boy doesn't look like the market is going to be happy about this election because Obama is going to win, whether or not that was right or wrong, and they're going to be concerned about the fiscal cliff. We took down our position again. Now when the market went down again, we said, okay, what are we going to do now? Hmm, they're giving away call premium now. call volatility traded really cheap. We also got longer because the market came back down to 1350, 1360 and we viewed that as too cheap given what was likely to happen"

David Tepper: Not Much Downside in Markets

"At 12 times next years with these interest rates, with these Fed, yeah, of course [Equities are] cheap. But you still do have the stuff that's going on in Washington that's holding back everybody and everything ... if it does blow up, the market will probably go down 2% or 3% ... but I think there's very limited downside. I think that on the upside a lot. "

"If you do the senate bill, you have no problem for ten years. Your debt to gdp is not going up for ten years. can you do the numbers. it's not going up for ten years. After ten years you have a real problem ... we should really make a down payment on the problem now"

David Tepper: 'Pretty Good Economy, Right Now'

David Tepper of Appaloosa Management, says the question you have to ask is what happens with the Fed when the unemployment rate comes down. They'll keep doing what they're doing till that happens, he adds.
"I've got an economy that has tailwinds -- housing, auto. And, it's a growing economy. And now I'm going to put a trillion dollars a year by the Fed ... Look at the united states of america. Looking at the LDP that got elected. Everybody knows that Japan is going to kind of pump it up starting in March/April. An ECB that has given you two different things and people only read one thing. they gave you the put with the OMT with Spain but they gave you a second put ... the second piece was when they ... didn't lower interest rates this time ... Basically you're in this situation, whenever Draghi wants to lower interest rates in Europe, he can do it."

Some manager news today

·         David Tepper’s Appaloosa Said to Fuel Trading in CMBS by offering to buy and sell bonds with a face value of at least $8 billion after Wall Street firms pulled back from making markets in the debt. The $15 billion investment firm is providing bids and offers on at least 49 bonds issued in 2006 and 2007 with prices from 22 cents to 61 cents on the dollar

·         Bill Gross tweet on the EU summit today: “This is no summit. It’s a coffee klatch filled with petit fours and empty promises.”

·         Marc Faber told CNBC that stocks will be a better investment than bonds for the next 10 years. "When you print money everything goes up at different times, different asset classes … I think that stocks may still continue to go up, and I would rather own equities than government bonds for the next 10 years."

·         Whitney Tilson: 5 money moves one Buffett disciple is making now. 1. Buy US Banks (GS, JPM, C) 2. Buy Tech (Dell, Apple, Microsoft) 3. Own Berkshire Hathaway 4. Look at management’s track record (Howard Hughes Corp and Anheuser Busch) 5. Piggyback on activist shareholders (Bill Ackman and JC Penney) 

It's David Tepper's World

Part I


Part II

It's David Tepper's world (continued)

The famous interview in September 2010 that kicked it all off...

"Everything will go up"