Multiple asset classes have soared since the Federal Reserve opened the monetary spigot last year. And now there’s little value left in markets, hedge fund heavyweight David Tepper said Friday.
“I don’t think it’s a great investment right here,” the Appaloosa Management founder told CNBC, referring to stocks.
“I just don’t know how interest rates are going to behave next year... I don’t think there’s any great asset classes right now... I don’t love stocks. I don’t love bonds. I don’t love junk bonds.”
The Fed’s federal funds rate target stands at a record low of zero to 0.25%. About half of the central bank’s policymakers expect a rate hike this year, but the other half don’t anticipate a move until next year.
The S&P 500 hit an all-time zenith of 4,560 Friday, but earnings growth may have peaked.
Fed officials have indicated they may begin tapering the central bank’s bond buying next month. If bond yields don’t rise at that point, stocks could rise in response, Tepper said.
“If we are going to sit here with 1.60% [on the 10-year Treasury yield] after the Fed announces tapering, then you could get a rally. There might be a trading rally. You might get 5% to 10% up. I’ll go in and get out.”
The 10-year Treasury recently yielded 1.66%, down 2 basis points. It has soared 49 basis points since Aug. 2.
Tepper’s advice now: “I think stay invested in the stock market to some extent, but don’t have your highest concentration you’ve ever had,” he said.