David Tepper Still Bullish On The Economy

David Tepper, founder of Appaloosa Management is on CNBC and he's bullish on the economy, in large part to strength in the economy and the Federal Reserve. It's not an everything goes up kind of market though, according to Tepper. The last time Tepper was on CNBC, he gave his famous "balls to the wall" speech, where he said to essentially buy anything and everything, as the Federal Reserve would come out with a second round of quantitative easing, or the economy would improve on its own. In the original speech, Tepper said that stocks would continue to do well, whether the economy improved on its own, or the Fed did a second round of QE. He said that risky assets would continue to rise, and that bonds wouldn't do as well. We got another $600 billion in quantitative easing, and it looks like the economy is starting to improve, thanks in part to fiscal and monetary policies. Ben Bernanke started planting the seeds for a second round of quantitative easing at his Jackson Hole speech back in August, which combined with Tepper, has sparked an equity rally that hasn't seen any major corrections for the past 5 months. Tepper said that QE2 did its part by keeping bond yields lower than they would've been without it. We would see a 10 year yield of around 3.8% without QE2. Tepper believes that a 4% yield on U.S. Treasuries is a feasible. Tepper thinks we could see a 14 or 15 multiple on the S&P 500 based on the 4% yield, and S&P earnings for 2012 could be $100. He is also saying that that unemployment is going to remain high for a long time, and there is going to be a segment of the population that is going to have trouble getting back to work. Tepper said that full employment may now be an 6.5-7% unemployment rate, as opposed to the 4% unemployment rate we've seen in the past. This isn't to say that the market is without risks, especially in European debt issues, as well as China. Tepper said that he owns Banco Santander STD, despite Spanish "cajas" having problems with liquidity. The Spanish government is currently injecting liquidity into the cajas. On specific stock sectors, Tepper said he likes the semiconductor industry, specifically Micron MU, which is one name he mentioned. He said the financial sector is still interesting. He really wants to invest in Europe, specifically Spain EWP, but he's not sure what the game plan is in Europe. Stocks finished the fourth quarter with remarkable gains, especially in December. Since the start of 2011, we've started to see a slowdown in the equity markets. Tepper runs Appaloosa Management, a $15 billion hedge fund based in Short Hills, New Jersey.