After revealing in March of this year that he was bullish on the market, billionaire hedge fund manager David Tepper (Trades, Portfolio) told CNBC’s “Halftime Report” on Friday that he has turned somewhat bearish due to uncertainties regarding interest rates and inflation.
Since the start of the Covid-19 pandemic, the Federal Reserve has stood firm on keeping the benchmark short-term interest rate near zero. More recently, officials have indicated they are prepared to start tapering monthly asset purchases in the next few months.
In addition, many investors believe that rising inflation, which is near a 30-year high, could result in the central bank pulling back on its easy monetary policy soon.
“I don’t think it’s a great investment right here,” Tepper said.” “I just don’t know how interest rates are going to behave next year... I don’t think there’s any great asset classes right now... I don’t love stocks. I don’t love bonds. I don’t love junk bonds.”
The guru, who founded Florida-based Appaloosa Management in 1993, acknowledged that his hedge fund has been “probably too conservative” this year, but has done well because of its bets on commodities and oil, which include Occidental Petroleum Corp. (OXY, Financial), Energy Transfer LP (ET, Financial), Freeport-McMoRan Inc. (FCX, Financial) and Enterprise Product Partners LP (EPD, Financial).
“We continued to keep that exposure relatively low but keep investing. I think stay invested in the stock market to some extent, but don’t have your highest concentration you’ve ever had,” he said.
Despite this outlook, he also stressed that it is not the time to short the market and still believes equities make great long-term investments that everyone should own.
Watch a segment from the full interview below.
