In case you were hungry for more in the way of bearish rumblings from the titans of finance after Tuesday’s unsettling (if amusing) comments from Stanley Druckenmiller, David Tepper was out Wednesday conveying a similarly alarmist assessment.
During remarks to CNBC, Tepper said this is one of the most overvalued markets he’s ever seen. US equities promptly pushed to day lows as he spoke.
Only in 1999 were equities more stretched, Tepper said, calling the risk/reward unattractive.
That echoes Druckenmiller, who on Tuesday told the Economic Club of New York that “the risk-reward for equities is maybe as bad as I’ve seen it in my career”.
Scott Wapner prompted Tepper by referencing Druckenmiller’s comments.
“Yesterday, your friend Stan Druckenmiller said this is the worst risk/reward for stocks he’s ever seen in his entire career — he’s had a long career, David”, Wapner chuckled. “Do you feel the same way that Stanley does?”
“Stan’s older than me”, Tepper chuckled. “I would say that ’99 was more overvalued, but I’d say it’s one of the most overvalued markets – maybe the second most overvalued market – I’ve ever seen”.
Tepper went on to say that stocks likely won’t retest the lows, though.
“The market is pretty high and the Fed’s put in a lot of money here”, he mused, noting that there are pockets of misallocated capital.
“The market is – by anybody’s standards – pretty full, but then again, there’s a lot of liquidity and the Fed’s still there, so” — Tepper paused for an audible sigh. “It’s too hard to say that the market can’t go up”.
It sure is hard to say that. Because, as I never tire of reminding folks, if you’re betting against risk assets right now, there’s a very real sense in which you’re putting your dollars up against the guy who prints them.
And while Tepper and Druckenmiller have a lot of dollars, their firepower, just like yours and mine, is finite.
Powell is subject to no such limits.
To quote Ben Bernanke, “We simply use the computer to mark up the size of the account”.
For those who might be wondering, “Where did the Federal Reserve get the $1.5 trillion they just committed to injecting?”
A blast from the past explanation of how it all works. 💻 pic.twitter.com/wCQUwni8El
— Stephanie Kelton (@StephanieKelton) March 12, 2020