David Tepper Touts Stocks On CNBC

Hedge fund manager David Tepper appeared on CNBC's Squawk Box this morning. Tepper is the founder of $12.4 billion Appaloosa Management. The fund manager made around $7 billion in 2009 by buying bonds and stocks in distressed financial companies. He personally raked in more than $4 billion, making him the highest paid hedge fund manager that year and 258th richest person in the world. Tepper outlined a bullish theory for stocks which is exceedingly simple, yet equally unsettling. Tepper told CNBC viewers that in his mind their are two different scenarios that are likely to play out over the next few months, both of which should be positive for the stock market. The first is that the economy improves on its own. He said, "either the economy is going to get better by itself in the next three months...What assets are going to do well? Stocks are going to do well, bonds won't do so well, gold won't do as well. Or the economy is not going to pick up in the next three months and the Fed is going to come in with QE. Then what's going to do well? Everything, in the near term though not bonds...So let's see what I got - I got two different situations: One the economy gets better by itself, stocks are better, bonds are worse, gold is probably worse. The other situation is the Fed comes in with money." The theory certainly makes some sense, but the big picture implications of it certainly bring up some questions. Essentially, the market is now in the business of front-running the Federal Reserve and the Fed is in the business of propping up the stock market. This is still going on, despite the fact that the recession supposedly ended back in June of 2009. Tepper's comments coincided with a meaningful uptick in the futures this morning, and once the market opened, stocks began to roar higher. We are currently trading up 176 points on the Dow at 10,838. One thing from Tepper's CNBC appearance needs some clarification. Some outlets have mistakenly quoted Tepper as saying that he was going "balls to the wall" long stocks. He actually said the exact opposite - We are not going "balls to the wall" long, but we certainly are increasing our allocation to equities based on the thesis that things will get better on their own, or the Fed will pour liquidity into the system. You can check out the video, as well as additional commentary on the video over at ZeroHedge. Learn how to find the best stocks to trade each day in our 70 page E-Book and 90 minute online video for free.