Stock market is in late-innings game, Appaloosa’s David Tepper says

Chuck
Burton/AP

• David Tepper, the co-founder of Appaloosa Management, said
  Thursday he had reduced his holdings of US stocks. 
• “I think it’s a late-innings game,” he told CNBC of the bull
  market. 
• Tepper said that worsened trade relations between the US and
  China could cause a 5% to 20% decline in the stock market. 

David
Tepper, the billionaire hedge fund manager of Appaloosa
Management, said Thursday that his firm had reduced its holdings
of US stocks.

“If you ask me what inning we’re in, I think it’s a late-innings
game,” Tepper, who manages about $14 billion in assets,
told CNBC of the nine-year bull market in stocks. 

At issue is the ongoing trade dispute between the US and
China. The Trump administration has threatened to
place tariffs on all Chinese products entering the country. A
$200 billion round of duties that could be announced imminently,
and Trump threatened last week to impose import taxes on
another $267 billion worth
of products.

Additional tariffs would “make it a little bit tough on the
market,” Tepper said, adding that stocks could drop between 5%
and 20% if the trade war worsens. 

“To me, the market is fair-valued if you don’t have tariffs on
China,” Tepper told CNBC. “But if you do have tariffs on China,
the question is how high will the dollar go, and then where will
earnings be in that case.”

Tepper said he had reduced his exposure to US stocks, although he
remained long the market. He estimated his fund had around 25%
exposure to the S&P 500 after reducing it by about 30%, which
has been the wrong move “because the market has been very
hot.” 

He said he remained bullish on Facebook
because the stock was still cheap. 

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