David Tepper, founder of Appaloosa Management, whose comments are known to drive markets, said it was very difficult to be a bear on the stock right now and said the Treasurys sell-off, which raised interest rates, was probably over.
The main market risk has been eliminated, Tepper said, adding that interest rates need to be more stable in the short term.
Bond yields have jumped sharply in recent weeks amid higher inflation expectations that have put pressure on risky assets. The ten-year treasury yield rose from 1.09% at the end of January to over 1.60% on Monday. Rapid progress has hit technology stocks particularly hard, as these companies have relied on easy loans for growth.
Tepper believes that Japan, which has been a net seller of government securities for years, could start buying US government bonds again after rising yields. The potential purchase could help stabilize the bond market, Tepper said.
“It takes a lot of risk off the table and it’s very difficult to be bearish,” Tepper said.
Another upward catalyst for equities in the near future is the coronavirus tax stimulus package that has just been approved by the Senate, Tepper said.
The hedge fund manager also said that bellwether shares such as Amazon are starting to look attractive after the downturn.
A year ago, before stocks really began to fall due to the pandemic, Tepper warned that the virus could change the game in the markets.
Junior Trader Mert Mustafa