David Tepper, the founder of Appaloosa Management and the owner of the Charlotte Panthers, is an icon when it comes to markets and trading. The prerequisite to such status is having a pristine record when it comes to returns and money management. Tepper has averaged a 25% return annually since his fund's inception in 1993.
Additionally unlike many other fund managers who were unable to replicate their success with more money to manage or in different market conditions, Tepper has proven himself adept and outperformed in bull and bear markets. Further, he started his career out in distressed equities and credit but has expanded his scope to become more of a macro trader.
In addition to these attributes, Tepper also seems to have a knack for figuring out how to make the easy money. Possibly the best example is in 2010 and 2011 when the consensus was for a double-dip recession. Tepper remained bullish on stocks, and he summed up the situation as either the economy is going to get better and stocks will go up or the Federal Reserve will reload and fire again and stocks will go up.
This captured the dynamic perfectly and was validated by the stock market's bull market over the next decade which was powered by an accommodative Fed and steady, consistent earnings growth.
Now, Tepper is feeling quite bearish and laid out his reasoning in a CNBC interview. His words had an immediate impact on the market as the S&P 500
Tepper has a similar rationale to his previous call. He doesn't want to fight the tide of global central banks tightening monetary policy all around the world. As a consequence, we are seeing stunning declines in M2, which measures the amount of money in circulation, and this has historically coincided with steep decline in stock prices.
Therefore, he is 'leaning short' entering 2023, and he also sees opportunity in shorting the 2-Year bond which is essentially a bet that short-term rates will keep rising, despite rising recession risk.