Summary of Interview of David Tepper on CNBC today

This morning CNBC had David Tepper, founder of Appaloosa Management, as their guest. If you don't know who David Tepper is, and you follow the stock market, you should. I will give a little summary of his notoriety at the end of this post, but suffice to say, this morning he predicts headwinds ahead for the market and he said that we will not be back to previous employment levels for 15-20 years. He sees the new normal unemployment rate to be in the 6.5% to 7% range, that's even after we get things better.

There were a number of points made this morning and I will summarize what interested me from what he said:

1. There is a bit more downside than there was back in September.
2. Regarding the food bank, Tepper says "I'm obviously an optimist" but things aren't going to get better anytime soon in terms of the need for philanthropy.
3. He's kind of bearish on bonds and gold.

Tepper's Appaloosa Management is a $15 billion hedge fund. Tepper is famous for his positive commentary in 2010 after the US government stepped up the plate with large stimulus programs. Tepper believed that these actions nearly guaranteed the rise of the equities markets in 2010, and he was proven correct.

Tepper accurately predicted that the S&P 500 would close 2010 up 13%. His forecast came true. He predicts a much more difficult 2011, and this, understandably, has many investors worried.

Tepper's hedge fund made a killing during the crash by betting the government wouldn’t let the big banks fail and he was correct.

He said today that companies have become very "efficient" in the past year or two because top line growth has been slow. To me that means squeezing more profits without adding new hires, so that the business keeps making money. But that is not growth and our economy needs growth right now to fully recover. So there is no way we are going to solve these problems with our economy by better efficiency. This is not a good forecast for our country's future.

Market Summary for May 4th and looking ahead

The markets are getting many to believe that they better get in as the train is leaving the station, but they are still timid, as low Volume says they are still waiting. There definitely is nibbling going on. I look at Insider trading daily and notice that the Insiders are still selling to raise cash, over buying, by a large dollar volume. My guess is that Hedge Funds may need to raise cash too and so there will be some selloffs into rallies but not to scare us. That is why this advance is so steady. It has not had the volatility one would expect given the past 6 months. The VIX index has been steady between 34-39 and much lower than the upper 40's to 50's level it had been at. The new money has come from funding of retirement accounts by April 15th but some will put this money into more secure investments and so this source of money to drive the market higher is about spent.

The Put to Call ratio is hanging more closer to the lows of the past 6 months than the highs from around 0.65-0.85. We are in the Dow range of 7,800 to 9,300 level we had been in before hitting the lows of 6,440. I do not see us going to 9,000 on this move up. I do see it at about 8,500-8,600 max and then a pullback. So I have decided to hold on to TZA and FAZ and ride this move up to its conclusion. I know when I am tempted to sell without supporting data, in this case high volume, we are close to the market move in the other direction. Therefore, I will Hold and not sell my ETF's, TZA and FAZ, but wait for them to be back in favor.

It's time for all to focus on SEC Chairman Christopher Cox!

Back on November 23rd, I wrote that we need the SEC to reinstate the "Uptick Rule" to prevent those who short the market and stocks to do so at this time which will exacerbate the problems. It is in part why Citigroup stock fell so sharply and why it was bailed out a week or so ago. The quote back then was, "One of the reasons Citi finds itself in this situation is the loss in their stock value at $3.94. One thing which would help is if the SEC re-instituted its Uptick rule to prevent continued shorting of the stock by speculators. It was the worst decision in SEC recent history to abandon the rule. Many have called for the head of Christopher Cox, head of the SEC and a Bush appointment. It seems too late for that but Cox could reinstitute the Uptick rule and help minimize a further slide in the share price. I just don't have any confidence in him doing that. It would be admitting he made a mistake and that is something the Bush Administration will not consider."

Well it is time for all to put the light back on SEC Chairman Cox, because what he is doing by not re-instituting the Uptick Rule is to give favored interest (he worked for the international law firm of Latham and Watkins) where the law firm defended many Hedge Fund cronies. The Hedge Funds are getting their payback and favored interest, as long as the Uptick Rule has been made void. Hedge Funds are not regulated and they like it that way and use firms like Latham and Watkins to help keep it that way. So let's all write to our Congressional leaders and local newspapers calling for Cox's head and possible indictment. He was appointed by President Bush and is in his final days in this Administration but one could argue what he has done is criminal and minimally requires more investigations by Congress.

You see my friends these people can take the markets down further below to 7,000 at any moment and they will clean up with your Retirement accounts going lower in value. This rule needs to be put back in play as soon as possible. Wake up to Chairman Cox and do some research on his background and see who are his special interest buddies. He most likely will return to work for this Hedge Fund firm in 60 days. Putting him in as SEC Chairman was like putting the fox in charge of the hen house or putting Chemical company management, Mining executives and other toxic producers in charge of the EPA.