After cautioning a year ago that the Covid-19 virus could be a game changer for markets, billionaire investor David Tepper (Trades, Portfolio) said it is difficult to be bearish on stocks right now.
The guru, whose New Jersey-based hedge fund will follow the crowd when needed but is also known for its contrarian calls, told CNBC's Joe Kernan that he is getting bullish on stocks for a specific reason: bond yields. He also thinks the selloff in Treasurys is likely over.
Kernan, who shared the Appaloosa Management founder's comments with "Squawk Box" on Monday morning, noted that he said since the major market risk has been removed, rates should be more stable in the short term.
"Basically I think rates have temporarily made the most of the move and should be more stable in the next few months, which makes it safer to be in stocks for now," Tepper said.
Bond yields have ballooned over the past several weeks on the back of higher inflation expectations, putting pressure on risk assets. The 10-year Treasury yield climbed from 1.09% at the end of January to above 1.60% on Monday.
As a result of the surge in yields, Tepper said he believes Japan, which has been a net seller of Treasurys for several years, may start buying U.S. government bonds again. This could potentially help stabilize the bond market.
"That takes a major risk off the table, and it's very difficult to be bearish," Tepper said.
The guru indentified the proposed $1.9 trillion coronavirus fiscal stimulus package that was just approved by the U.S. Senate as another potential catalyst for stocks in the near term. It is expected to be passed by the House of Representatives later this week before being signed into law by President Joe Biden.
Following the pullback, Tepper also said "bellwether" stocks like Amazon.com Inc. (AMZN, Financial) are starting to look more attractive. Shares of the Seattle-based e-commerce giant have fallen substantially since the beginning of the year.
Watch the full segment below:
Disclosure: No positions.
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