David Tepper

David Tepper, is the founder of the hedge fund, Appaloosa Management. Tepper’s $16 billion fund is up 35% year to date. He believes that Fed actions have helped the economy and the markets. Tepper believes that the Fed sees a 6 percent unemployment rate is the trigger for inflation. This video lasts 19 minutes and is embedded below along with a computer generated transcript:

isten, if they need to do it, all they have to do is start taking that balance sheet down and start detracting. that sounds easy, david. it’s not easy but it will happen. his hotel, california, who wrote that song? eagles. i’ll give him prince. we’re going to party like it’s 1999? yeah, we can party like it’s 1990. listen, i’m not talking about the economy, i’m talking about — you have so much money. raspberry. red beret. i didn’t say red beret i cedras berry beret. i don’t have monitors. so then, we will get to 6.5% on track in unemployment? this will work? now you’re asking me a different question. do you believe in the new normal? like the pimco idea that we’re going to have subemployment, permanently. the question that the fed is taking a chance. this is a different way to put it. the fed is taking a chance that 6% is where you start triggering inflation, okay? that’s the real trigger here. on unemployment. they’re going to go to 6.5. i think the fed is that they’re not going to trigger until you get to 6%. i think that’s the best i get out of this. i don’t know if that’s right. the question is do you trigger at 7%. you could trigger the real economy and that’s something fisher would be worried about. you have to pull back and you can’t get to 6% and it is possible we have a higher employment rate. and i would love, listen, most important thing is people have jobs, and for people. self-worth and such. there’s the economy. there’s markets. okay. in the big concern is inflation. okay that you’re going to get inflation sooner. on the way to sooner inflation, remember it’s very hard in this economy to have inflation when you have a high employment rate. the question is, right now, nobody’s worried. it hasn’t worked. people worried about inflation who haven’t seen it. you’re not going to see it. i’m not concerned until sometimes in the 7s. i’m a little more concerned than the fed. i don’t know if they’re right or wrong. at some point everybody’s concerned about inflation. the way to inflation, on the way to inflation in the real economy, you’re going to have another sort of — what were your best picture — it’s inflation and asset prices. okay? so you — there’s a market and there’s this. so you’re going to miss out on it if you don’t jump in on it. you have to be cognizant. if you look at the markets right now, okay, and what people are doing and you look at the options market. we can talk about where they should be higher now because you have this binomial situation we’re running. if you look at the option market, what are people more concerned about? if you go 30 points out of the money, the put cal is a lot higher than the call fall. so i don’t have to know anything else except the people are still cautious. otherwise we should have this whole even thing. remember the market can only go down as high as the market is. markets go up four times. so that’s how people are set up, generally. and listen, i’m — nobody likes to lose two or three or four or 5% if it happens at the end of the year because of something that happens in d.c. particularly the end of the year for a lot of hedge fund guys. we’re probably more than anybody else willing to take a loss. we do that. we don’t worry about it. a lot of people get money off the table. because they don’t want to have that year-end loss. how many people had the year you had? we do — when we’re down we’re put in positions. i know. so what was it that you did in the past year that got you 25% or 30%, and is it the same — you have some of the same? you want to know? i do. this is easy. it’s always easy when i come on the show to explain it. this is a market because there’s a lot of street guys that are out of business, right? you know, they’re not out of business but they won’t take the risk because they’re excluded. so here we go. we want to talk about the year. the year at appaloosa. so we go in december, we’re waiting — you have to anticipate what’s going to come next and when things are going to move. so you got the year. in december you’re sitting there, you’re waiting, you say are there going to be ltr or not. if you waited for them to do the ltro in europe, then you invested, in december, and you invested fast, you could take a lot of money. so we made a lot of money. you know, on that first move. then it comes into april. okay. and you look at april and say look the economy looks like it’s going to slowing. a week before the greek election, put calls were at 13. the put side not the call side. they basically said to me, hmm we’re not concerned about greece. we’re not concerned about the economy. why don’t you have these put calls they’re really almost for free. we bought puts so we didn’t have a loss in that drawdown. then we listen again. and we didn’t have to — again, we don’t have to be that smart. okay. we’re not that smart. again, we get into the next time, and draghi is talking about this, that the other, talking about this put and boy he did. he gave away this put. people not listening to it. you ow what we did when we heard about that? we got invested. and that worked too. then we got io this election and said boy doesn’t look like the market is going to be happy about this election, because obama is going to win. whether or not that was right or wrong, and they’re going toish concerned about the fiscal cliff. we took down our position again. now when the market went down again, we said, okay, what are we going to do now? hmm, they’re giving away call puts. call premium now. call premium traded really cheap. let’s buy call premium and that’s what we did. and we got a little longer, into the end of the year. just comparing call premiums and put premiums versus a put versus call premium. call vol, volatility, prices being cheap. versus but — — longer because

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