Influential hedge fund manager David Tepper appeared on Bloomberg TV with Stephanie Ruhle and Erik Schatzker, and talked a bit more about his call on the “beginning of the end” for the bond market rally.
Tepper rhetorically asked if bond investors in Europe are really being paid enough for the risk they’re taking?
“There are a lot of places to lose money,” Tepper said, noting that short-term interest rates in a number of countries in Europe, from Germany to Ireland, are negative on a real basis.
“If you look at the Euro Stoxx 50, you have a 3.6% dividend yield,” Tepper said. “You have higher dividend yields all through Europe and Japan than the bond market, so at some point that has to turn.”
But this “turn” in bonds won’t happen, Tepper says, until central bankers, namely Mario Draghi, finally starts doing something.
Tepper said that the beginning of the end would be coming for the bond market when the ECB started a full quantitative easing program. To date, that hasn’t happened.
The ECB’s next monetary policy meeting is on Thursday.
Tepper also spoke on a number of other subjects including: