Tepper: QE3 won’t happen before the market or economy drops significantly

The “Tepper rally” began lat year when Hedge Fund manager David Tepper went on CNBC last September and said quantitative easing was a “win-win” for markets:

But, could QE help lift asset prices? David Tepper thinks so and he is bullish. See the two clips below for why (30 minutes runtime). And Tepper has a good 17-year track record of over 30% compound annual returns. Watch for his comments about why he got bullish on bank stocks early in 2009 – it has a lot to do with government telegraphing their intentions. And again here, he says that the Fed is telegraphing that it wants inflation for the first time ever in his career. To Tepper, that means something.

–David Rosenberg on Why David Tepper is Wrong

Now Tepper is saying something altogether different. Take a look.

"If (the S&P 500 falls) a couple hundred points and financial conditions tightened maybe they would reconsider," Tepper wrote. "But there is no logic to QE3 now and the only result might be more food and energy inflation."…

The market has been rife with speculation since a 6 percent drop in stocks on whether the Fed, faced with persistently high unemployment and a double-dip in housing prices, would step in with more easing.

But Tepper told CNBC that the fall in stocks since the May 2 post-financial crisis high was "not enough of a drop" to bring the central bank in off the sidelines. QE2 is set to expire at the end of June with the last of $600 billion in Treasurys purchases.

He also said that further easing might only spur more energy and food inflation, meaning the Fed has to "let it ride" for now

–No More Fed Easing Unless Stocks Drop More: Tepper – CNBC

Also see:

• The QE2 trade is now officially over from March which argues that QE2’s end mean lower shares and yields
• QE3 will only become a reality after the economy deteriorates
• From cautious optimism to caution