The so-called Fed put Tepper refers to is the notion that the central bank would take action to support stock prices in times of volatility, without explicitly saying it was doing so. A put is an option that pays off when a security’s price falls below a certain level.
The S&P 500 is now down 6 percent this year, battered by the ongoing trade battle with China and fears of what the Fed increases are doing to the economy. The benchmark is down more than 14 percent from its record high reached in late September. The U.S. budget deficit could hit almost $1 trillion next year, Nomura Instinet estimates, which will cause the Treasury to increase the supply of debt it auctions. That, in turn, could weigh on the prices of bonds and other assets, Tepper speculates.
Tepper is the founder of Appaloosa Management, which has $14 billion under management. His calls have moved the market in the past like when he predicted in September 2010 that the stock market would surge as the Fed sought to inject the market with more liquidity. The S&P 500 is up 164 percent since that call, known as the “Tepper Rally,” in part because of additional stimulus from the Fed in the form of quantitative easing. That’s now being reversed with the Fed’s balance-sheet reduction.
Tepper, who also owns the Carolina Panthers, told CNBC in September that the bull market was in the late innings and he was selling some holdings.
from Just News Viral https://ift.tt/2Sf5Jlu
0 Comments