David Tepper sees further stock price declines likely going forward.
“My Balls Are In My Jockstrap” Stocks could drop another 15%, said David Tepper who has been ranked the fourth highest-paid hedge fund manager in the world, according to Institutional Investor Alpha’s quarterly magazine for the hedge fund industry.
But what an extraordinary two months it has been. So the bizarre narrative goes that some person in China bites a bat’s head off, it is a biblical leaf out of Adam Eve who ate the forbidden fruit, and somehow just like that the black horse from the apocalypse suffocates humanity and the world becomes suddenly unrecognizable.
“My Balls Are In My Jockstrap, Stocks could drop another 15%”
If you believe that I have got a bridge in London to sell you.
Liberal democracies have now been suspended, major economies are in shutdown and the horse that David Tepper loves riding has gone crazy. Remember that horse that David Tepper bragged about that he loves riding? Last month we wrote a piece entitled, David Tepper Bets Bull Market Has Legs.
“I love riding a horse that’s running” David Tepper told CNBC’s Joe Kernen in an exclusive email. “We have been long and continue that way” added David Tepper founder of Appaloosa Management.
But we wrote, “perhaps, more importantly, should investors take with a pinch of salt David Tepper bets bull market has legs view which the billionaire hedge fund manager is currently touting”.
So it is remarkable that the billionaire hedge fund manager’s balls are still in his jockstrap, albeit aching, bearing in mind that the last few months have been a wild ride. The US stock market has wiped out the entire $11.5 trillion in market capitation since its peaking on February 19. That is one hell of a buck.
“The US stock market has wiped out the entire $11.5 trillion in market capitation since its peaking on February 19”
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Despite the carnage, the fastest stock market crash in history, David Tepper sees further stock price declines
David Tepper also notes that the COVID-19 was a big game-changer in early March, around about the time WHO was downplaying the virus.
“I spoke to David this morning and yesterday, and it is the ‘game-changer’ make no mistake about it,” Cramer said on “Squawk on the Street.” “He’s very, very concerned”.
COVID-19 has “certainly ruined the environment” for stocks that had been the case before the outbreak, David Tepper told Cramer on the red carpet for the 9th Annual NFL Honors show, one day before the big game on Feb. 2.
You have to be careful, because it may be a game-changer. So you’ve just got to be cautious” David Tepper said at the time. David Tepper owns the NFL’s Carolina Panthers.
“US isn’t built to be shut down over a virus” – US President Trump
David Tepper sees further stock price declines of about another 15%
But this new secular bear market, bearing in mind that stocks have already fallen 20% from their peak, could see stocks fall another 30% over a long period. So from a secular bull market peak to a secular bear market, low stocks can shed a significant 50% of their value.
David Tepper sees further stock price declines could be bang on the money
Peak fear or bull capitation occurs when the VIX Index exceeds 80 as it did during the 2008 financial crisis. The CBOE Volatility Index or VIX was created by the Chicago Board Options Exchange (CBOE). The Volatility Index is a real-time market index that represents the market’s expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options and it provides a measure of market risk and investors’ sentiments.
The worst-case scenario where David Tepper sees further stock price declines would most likely play out if what we are experiencing is a systemic crisis heading into a reset
Put simply, COVID-19 could provide a perfect backdrop to crash the economy and usher in a new system. If this were the case, then we could expect the VIX to exceed 80 and the bottom in stocks could even exceed 50% from its highs. But as I reiterate that would be the worst-case scenario and there are already leaders on the world stage calling into question the government’s reaction to the pandemic.
“We’re not going to let the cure be worse than the problem,” said US President Trump.
Voice of reason?
The eurozone economy is sinking as countries toughen containment efforts, implementing draconian strict stay-at-home policies.
“The people will soon see that they were tricked by these governors and by the large part of the media when it comes to coronavirus” – Jair Bolsonaro
Meanwhile, Brazil’s Jair Bolsonaro says coronavirus crisis is a media trick.
“The people will soon see that they were tricked by these governors and by the large part of the media when it comes to coronavirus” said, Brazil’s Jair Bolsonaro.
“It is a shameless campaign, a colossal and absurd campaign against the head of state … They want to force me out however possible” said Brazil’s Jair Bolsonaro.
Staying with the theme that David Tepper sees further stock price declines could be a reality if relentless lockdown forces businesses to close
Unprecedented job losses are expected to occur in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in the gross domestic product, according to the Fed’s James Bullard. Approximately, 30% of Americans will lose their jobs, according to Fed’s James Bullard.
Lockdowns will collapse the economy but with politics being so polarized these days both sides of the political spectrum see it as an opportunity to take each other out. Meanwhile, the global economy is staring down the barrel of the Greatest Depression.
David Tepper sees further stock price declines and his view may not be overblown until the hysteria subsides
Cigarette smoking is responsible for more than 480,000 deaths per year and yet the tobacconists are still open. COVID-19 has killed less than 11,000 globally.
So do you think the government’s response is balanced and measured?