Friday, January 21, 2011
[Video] David Tepper Still Bullish, but "Not Everything Will go Up" This Time Around
CNBC went "balls to the walls" with a commercial free 40 minute interview with Mr. David Tepper. Actually there was a lot more talk about general broad economic themes, and less about the stock market, but big picture he is still quite bullish based on earnings expectations for 2012 along with some modest P/E multiple expansion. He believes with a 4% (max) rate on the 10 year bond, multiples should be closer to the 14-15 range and you can cross reference that to expected S&P 500 earnings at year end 2012 of somewhere over $100. With analysts believing $95ish for 2011, if we put 10% growth on that you are close to $105 for end of year 2012.
$105 x 14.5 PE multiple = S&P 1522 in about 2 years.
Of course the caveat to all this is we had huge expectations for 2007-2008 earnings based on analysts' expectations and those did not come to fruition.
He has pointed out the same thing I have often said, people should not confuse the U.S. economy with corporate profits; and even more important "American" companies are increasingly not reliant on the U.S. economy with a large proportion of sales and profits now coming from overseas. Of course that raises other issues, if those markets slow down. It also does not mean great things for the American worker, but as a hedge fund manager that is an afterthought to corporate profits.
As for Europe, it is clear he believes the ECB should be doing everything the Fed is doing and going 'balls to the wall' by handing money out in every direction. He chose not to say much about it because his mom said if you don't have nice things to say about peoplewho don't print money so the speculator class can get massively rich, then don't say anything.
Generally he came off much more bullish than I thought - after such a huge run since August 2010 I thought he would have be more constrained, but aside from saying this time around not "everything" will go up, he still was very positive. [Sep 24, 2010: [Video] Appaloosa David Tepper - Ben Bernanke Will Make Everything Go Up in the Can't Lose Environment] I did not see him walk on water as was promised.
$105 x 14.5 PE multiple = S&P 1522 in about 2 years.
Of course the caveat to all this is we had huge expectations for 2007-2008 earnings based on analysts' expectations and those did not come to fruition.
He has pointed out the same thing I have often said, people should not confuse the U.S. economy with corporate profits; and even more important "American" companies are increasingly not reliant on the U.S. economy with a large proportion of sales and profits now coming from overseas. Of course that raises other issues, if those markets slow down. It also does not mean great things for the American worker, but as a hedge fund manager that is an afterthought to corporate profits.
As for Europe, it is clear he believes the ECB should be doing everything the Fed is doing and going 'balls to the wall' by handing money out in every direction. He chose not to say much about it because his mom said if you don't have nice things to say about people
Generally he came off much more bullish than I thought - after such a huge run since August 2010 I thought he would have be more constrained, but aside from saying this time around not "everything" will go up, he still was very positive. [Sep 24, 2010: [Video] Appaloosa David Tepper - Ben Bernanke Will Make Everything Go Up in the Can't Lose Environment] I did not see him walk on water as was promised.
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