You are a free subscriber to Me and the Money Printer. To upgrade to paid and receive the daily Capital Wave Report - which features our Red-Green market signals, subscribe here. The Interviews That Shaped The Post-GFC Market... No. 4 - David Tepper in 2010We continue to look at the interviews that shape the markets... and my world view...
Dear Fellow Traveler, On September 24, 2010, David Tepper sat down on CNBC's Squawk Box and delivered one of the clearest assessments of post-crisis markets ever... In five minutes, Tepper essentially told everyone that Discounted Cash Flow models and all the stuff we learned in MBA Finance were now as useful as a screen door on...
He now suggested that traditional price signals mattered less than Fed policy. And he was correct. From what I've learned after years of studying monetary policy, it’s because deflationary debt spirals are what the Fed wants to prevent. People don’t understand that Ben Bernanke was all about liquidity… and stopping deflation because he was hyperobsessed with the Great Depression (and the lack of liquidity that fueled banking collapses and deflationary weakness). Tepper’s message wasn't complicated… the Fed would create a Put… He said:
In Tepper's framing, the Federal Reserve had turned the stock market into a casino where the house limits how much the Longs can lose. Odd… isn’t it? Except… the shorts could lose… a fortune. And that thought process hasn’t stopped… we’ve just moved the accommodations around the globe… with the European Central Bank, People’s Bank of China, Bank of England, and Federal Reserve all employing the same sort of policies to rebuff deflation or worse - bond crises… The Man Behind the MessageTepper's Appaloosa Management had just posted a triple-digit return in 2009… While your portfolio manager was hiding under his desk and avoiding phone calls, Tepper was printing money faster than Jerome Powell on a Tuesday. He was doing CNBC a favor by helping them understand the basics of monetary policy reactions - the very things that make the rich richer… and everyone else gets to socialize the rebound in equity prices because new money creates monetary inflation… that society shares and experiences through debasement and the fiat version of the Cantillon Effect… In 2009, Tepper made his killing by buying beaten-down bank stocks after Washington made it clear they'd backstop the entire financial system. That never went away (see the Silicon Valley Banking crisis… and the mental gymnastics of that 2023 period - we just didn’t call it Quantitative Easing...) When someone like Tepper generates those kinds of returns during a financial apocalypse, you listen. His logic was simple. If the economy improved, stocks would rise. If the economy didn't improve, the Fed would step in with more stimulus, and stocks would still rise. Heads you win, tails you also win. And funny enough… that has happened over and over again for 15 years… They would aim to achieve QE-like outcomes… but just call the programs and policy shifts something else. Oh, and they’d engage in misdirection at each turn. That’s why I always argue - never listen to what they say… Watch what these bureaucrats do… The Fed Put ExplainedA "put" in financial terms is insurance against losses. Tepper was saying the Fed had essentially issued a de facto insurance on risk assets. Not officially, of course… they’d never admit this… But effectively. This wasn't market analysis by Tepper - it was regime recognition. Tepper understood that in the immediate aftermath of the 2008 financial crisis… monetary policy mattered more to asset pricing than corporate earnings, economic data, or any other traditional metric. And your MBA finance and the CFA textbooks? They were better reserved as kindling at that moment… Tepper wasn't saying every trade would be profitable or that fundamentals didn't matter. BUT… he was saying that policy reaction functions had become the dominant driver of liquidity and momentum. And that drove so much of the markets from 2009 to 2021… before the great surge of inflation and ensuing rate hikes… When the Federal Reserve is your biggest trading counterparty, you adjust your strategy accordingly. Or as I like to say: When the ref is on your team, you play a different game. The 2010s largely proved him right. Market corrections typically got bought because investors expected Fed intervention or action by other central banks (see China in January 2016). Economic slowdowns often trigger easier policies. Bad news became good news. Up was down. Human sacrifice… Dogs and cats living together. Mass hysteria!
But then, there’s what I learned out of this… and that was who to follow when the “Put” was put in place… Insiders have conveniently called the bottom of every major downturn… And the insider buying to selling ratio below (the spikes in the blue line, which is the five-day moving average) accompanied monetary, fiscal, or supply-driven policy changes that accommodated market policy (and helped reamplify leverage…)
What’s interesting, though, is that the spikes that are on the far right after 2020 aren’t as pronounced as, say, the March 2009 (First QE round) or January 2016 (China)… And I hypothesize that they’re still calling the bottom… It’s just happening more often now… not every three to four years… but every six to 18 months… Many crises became viewed as buying opportunities. "Don't fight the Fed" became the dominant investment framework. What made Tepper's call so prescient wasn't his optimism - it was his recognition that traditional price discovery had been largely replaced by policy anticipation. I think now - in a post-COVID world… markets are just front-running liquidity expectations - and now that we have the Fed AND the Treasury acting as a buffer… it’s just one insane pump after the next… And This is The !#$@R@$W Problem with Markets Today…What’s been the result of this? Capitalism died… And I’ll prove it… by the omission of capitalism… Look at the K-shaped recoveries. The socialized bailouts. The inflation on top of policy deception. As the movie Money Game taught us… “Print the money, or start a revolution…” Markets increasingly stopped pricing companies and started pricing central bank interventions. Now… they’re starting to incorporate TREASURY accommodation due to goals to contain yields and maintain our insane debt system (That needs refinancing). We're not investing anymore. We're betting on which bureaucrat blinks first. This represents a fundamental shift in how markets function - a system where asset prices are heavily influenced by unelected officials using tools most people don't understand. And Americans don’t… only 6% of people understand just the Fed’s dual mandate. I’ll bet that only 1% understands the other things the Fed does to backstop the dollar’s reserve status, and its efforts to provide ample liquidity to foreign institutions in the event of chaos. They opened up their swap lines in 2008 and 2020 to foreign institutions, well before Congress could provide stimulus to Americans, who have to pay the socialized costs of these capital injections via inflation and devaluation of the currency. Isn’t finance great? And that’s where I get really pissed off… Here’s the omission. When I write about full-blown socialists now running cities (and more on the way in New York and Minneapolis)… people at the top levels of government now running the economy on 18th century Mercantilist views (which are state-wealth-planning initiatives)… central banks engaging in excessive levels of CENTRALIZED PLANNING… and American companies operating in feudal-like structures… I ask… Where is the living $@#* is the capitalism people keep saying we employ? How the hell are people blaming capitalism for the mess of the last 17 years? If someone thinks that we are still a capitalist country after the 2008 financial crisis… Then they need shock therapy… This is Not A RantTepper didn't declare this system good or bad.  He just identified the regime and positioned accordingly. Smart money follows policy, not just earnings. And you’d better too… It’s NOT hard… You just need to know where to look. When the Fed issues a put, you don't bet against it. Tepper's 2010 appearance became shorthand for understanding centrally influenced modern markets… When policy backstops are credible and visible, downside risk shrinks, and assets can levitate on expectations alone. His interview didn't predict anything - it documented the regime change. His advice was pretty simple… the rules being like arm-wrestling a gorilla. Even if you could win, why in the hell would you try? And that’s what made it so important - and radically changed how I viewed finance. Every investor since 2010 has had to answer one fundamental question… Do you trade based on what companies are worth, or do you trade based on what the Federal Reserve will do next and whether liquidity is strong or not? Tepper showed us which framework worked in the latter environment. The Fed had issued a put, and as he said, you really didn't want to stand in front of it. Seventeen years later, that dynamic still shapes how investors frame risk. And until someone else convinces me otherwise… we trade the 1% pattern until it breaks… Full stop… Mic drop… And watch the FNGD in case the music stops… Stay positive, Garrett Baldwin Receipts… (Because, unlike the Fed, I show my work)
About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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