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David Tepper, founder of Appaloosa Management, whose comments have been known to move markets, said it is very difficult to be bearish in stocks at this time and believes that the sale to Treasury has probably ended. driven types.
The main market risk has been eliminated, Tepper said, adding that rates should be more stable in the short term.
“I basically think rates have temporarily taken advantage of the move and should be more stable in the coming months, which makes it safer to be in stock for now,” Tepper told Joe Kernen of CNBC, who shared the comments about “Squawk Box.”
Bond yields have jumped sharply in recent weeks amid higher inflation expectations, which put pressure on risky assets. The 10-year Treasury yield rose from 1.09% in late January to over 1.60% on Monday. The rapid rise in yields especially affected technology stocks, as these companies have relied on easy loans for superior growth.
Tepper believes that Japan, which had been a net seller of the Treasury, could start buying US government bonds again after rising yields.
“This is a big risk and it’s very difficult to be a bassist,” Tepper told Kernen.
Another bullish catalyst for short-term stocks is the fiscal stimulus package just approved by the Senate, Tepper said.
The Democratic-controlled House is expected to pass the $ 1.9 trillion stimulus and economic stimulus bill later this week. President Joe Biden is expected to sign it before unemployment benefits programs expire on March 14th.
The hedge fund manager also said “more uncomfortable” stocks like Amazon are starting to look attractive after the downturn. Shares of the e-commerce giant have fallen 9.7% in the past month.
A year before stocks actually began to fall due to the pandemic, Tepper warned that the virus could change the game of the markets.