Billionaire David Tepper is feeling ‘miserable’ about stocks, but won’t ‘fight the Fed’

Core Viewpoint - Hedge-fund investor David Tepper expresses a mixed sentiment about the U.S. stock market rally, indicating that while he sees potential for continued growth due to Federal Reserve rate cuts, there are concerns about valuations and the risk of overheating the market [1][2][3]. Market Performance - The U.S. stock market has experienced significant gains in 2023, with the S&P 500 index up approximately 13%, the Dow Jones up 8.7%, and the Nasdaq Composite up 16.5% as of Thursday [2]. - The Russell 2000 index, which tracks small-cap stocks, is also approaching record levels, while the real estate sector has shown signs of recovery due to optimism surrounding rate cuts [2]. Federal Reserve and Interest Rates - Tepper acknowledges the Federal Reserve's recent interest rate cut, the first in nine months, and anticipates two more cuts within the year, which could support the economy [3]. - However, Tepper cautions that further rate cuts could be complicated, especially as stock valuations are already high, suggesting a need for careful management to avoid excessive market heat [3]. Investment Focus - Tepper is monitoring 10-year Treasury yields and 30-year mortgage rates, believing that housing-related assets could benefit from falling rates, particularly if the Trump administration influences Fed policy on mortgage-backed securities [4]. - Last year, Tepper made a significant investment in China, which he reports has yielded positive results, indicating a strategic approach to international markets [4].