This hedge-fund manager says it's a 'max-long' moment for stocks

By Steve Goldstein

Investor says cocktail of China and Fed easing should lift stocks

Famed hedge-fund manager David Tepper made waves last week by not just saying how much he liked assets tied to China - "everything," he kept repeating - but also how aggressively he was taking the position. He said the new size of his China position was twice the previous one, and without precisely nailing that down, suggested it now was more than 20% of his fund.

That aggressive stance comes to mind hearing another hedge-fund manager, Jim Roppel, talking with MarketWatch sister publication Investor's Business Daily. Wearing a T-shirt quoting the famed early 20th century trader Jesse Livermore, "it's not the thinking that makes the money, it's the sitting," Roppel ridiculed people who want to take profits up 20%.

"If you buy a stock at a pivot point, you are waiting to stop out, you're watching it like a hawk until you are up 10%, 20%. Once you're up there, it can move in its natural flow and you can chill, but if you dump it at 20%, now you got to redeploy that cash, and you're right back on the razor's edge," said Roppel, who also authors an investment newsletter.

He points out that measures of investor sentiment, like the American Association of Individual Investors weekly survey, are way off their highs, even with major indexes hitting record highs. "Sentiment says there's a lot of room for upside," he said.

The Federal Reserve's half percentage point interest rate cut in September in an economy not in recession is "rocket fuel," Roppel said. American Express (AXP), Mastercard (MA), Costco (COST) and Walmart (WMT) shares have all hit record highs, showing the strength of the U.S. consumer, he said.

He called China's recent monetary stimulus unexpected as he pointed out many Chinese companies, such as Alibaba (BABA), are still "crushed" compared to their all-time highs. "When you have companies that are absolutely compressed to crazy low valuations and then you get a bazooka of liquidity coming in, that's an opportunity to me, where I'm willing to take some added risk in moderation," he said.

Talking about Constellation Energy's (CEG) recent deal with Microsoft (MSFT) to reopen a plant at Three Mile Island, Roppel said if AI was a baseball game, the first batter is walking out to the on-deck circle. Another energy play, GE Vernova (GEV), he says is worth the risk of being stopped out early.

More broadly, while there may be sideways moves until the election, he said markets look favorable through the balance of this year and into next year, Roppel said.

"I started in 1985. I've watched the cellular boom, i watched the internet boom, I watched the biotech boom, I watched all of them, and I've never seen something fundamentally this big with China turning, the PBOC gunning money supply, with the Fed cutting. I don't think I've seen a cocktail of ingredients that fundamentally paint a picture like this, ever. In my opinion, for my risk tolerance, this is a max long moment," he said.

The market

U.S. stock index futures (ES00) (NQ00) were wavering early Tuesday after the S&P 500 SPX finished the third quarter with its 43rd record close. The yield on the 10-year Treasury BX:TMUBMUSD10Y fell 4 basis points to 3.74%.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              5762.48    0.77%   2.02%   20.81%  34.37% 
   Nasdaq Composite                                                     18,189.17  1.20%   2.68%   21.17%  36.68% 
   10-year Treasury                                                     3.747      1.40    -8.90   -13.39  -105.70 
   Gold                                                                 2670.6     0.65%   5.31%   28.90%  44.82% 
   Oil                                                                  67.57      -4.47%  -8.26%  -5.27%  -23.75% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Dock workers at key U.S. ports began a strike, as President Joe Biden said he would not implement a law that would trigger a 90-day cooling off period. Related: 'I will cripple you' - dockworker's union vows to shut down U.S. economy with strike

A busy U.S. economics calendar includes job openings and the Institute for Supply Management manufacturing index.

CVS Health (CVS) is reportedly reviewing options including a breakup.

Israel's military began what it called a limited operation in South Lebanon.

The vice presidential debate between Sen. J.D. Vance and Minnesota Gov. Tim Walz is set for 9 p.m. Eastern.

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The chart

The best asset for U.S.-based investors in the third quarter was Hong Kong-listed stocks, triggered by China's announcement of stimulus measures and support for reflating the number-two economy. This year, silver is narrowly ahead of Hong Kong stocks, followed by European banks. The worst asset in the third quarter was oil, and the worst for this year has been Brazilian stocks. "Overall, this meant that financial markets ended up defying the usual September gloom of recent years," said Deutsche Bank strategists.

Top tickers

Here were the most active stock-market tickers as of 6 a.m. Eastern.

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   NIO     Nio 
   GME     GameStop 
   HOLO    MicroCloud Hologram 
   SMCI    Super Micro Computer 
   AAPL    Apple 
   DJT     Trump Media & Technology 
   BABA    Alibaba 
   TSM     Taiwan Semiconductor Manufacturing 

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-Steve Goldstein

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10-01-24 0637ET

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