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Macke: Enjoy August profits and take some money off here

Kevin Chupka
Executive Producer/Writer

The European Central Bank moved Thursday to further stimulate the lagging economic conditions there, prompting a slump in the euro and a boost to the dollar here at home.

Whalish hedge fund manager David Tepper of Appaloosa Management was quick to weigh in, telling Bloomberg:

Basically what it all means for the markets is higher equity prices and a beginning of the end of the world bond market bubble … We are done.

Is he right? Will the ECB’s move boost stocks here and ring the death knell on the bond rally? Yahoo Finance editor-in-chief Aaron Task and Yahoo Finance anchor Jeff Macke debated the merits of Tepper’s argument.

“All these assets are relative,” Macke says, “and all of a sudden, ‘gee that 10-year yield in the U.S. looks mighty attractive.’”

The move from the ECB, combined with the general machinations of the Fed proved the world economic powers are still concerned about deflation and are doing everything they can to get people to spend.

If they succeed, and inflation creeps back into the equation, Macke believes that’s bullish for stocks and Tepper may be right on at least that portion of his call. Still, in the short term “the reversal in the S&P and the Dow [yesterday]” is giving Macke pause.

“It’s hard to find a reason to get real bullish on equities here simply because of the rally we’ve had,” he notes, pointing to an August that saw stocks surge to new highs.

So what should you do while you wait to see what happens in the world of monetary policy? “You take some money off here while you can,” Macke recommends. “Let’s not be so freakin' bullish because we had a really big August, no one expected it.”

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