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The Morning Brief: Tepper Bullish on Stocks; Wood Leaves Whitebox; Sony Chief Asks for Patience

Appaloosa Management founder David Tepper on Friday told CNBC that investors are overreacting to Federal Reserve Chairman Ben Bernanke’s comments on Wednesday that the Fed will begin scaling back its massive bond buying program and will look to end it by mid-2014 if the economy continues to improve. Investors, spooked at the prospect of the easy money era coming to an end, fled stocks in droves on Thursday, when the Dow fell 2.3 percent and the S&P fell 5 percent from its May 21 high. Tepper said that if the Fed begins tapering, that’s actually a good sign. "All the concern in the markets is because the Fed sees the economy stronger in the future," he said in a statement to CNBC.

Tepper, who topped the Institutional Investor’s Alpha Rich List last year with a $2.2 billion payday, has favored stocks for some time. He touted equities during a May 14 appearance on the network and at the same time warned that Fed tapering is on the way.

Yields on 10-year Treasury notes also spiked after the announcement, surpassing to 2.4 percent, but Tepper said this is also a good sign for equities. "The bond (market) is concerned about the strength," Tepper said in the statement. "A 10 (year) bond at 2.4 or even at 3 (percent) if it's because of strength is ultimately healthy. I obviously thought they should start to taper. Bottom line when the dust settles only one place to be STOCKS. "

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Now this is what you call early retirement. Jonathan Wood is stepping down as president and chief operating officer of the hedge fund firm Whitebox Advisors to devote all of his time to the charity he started two years ago, Charity Aware. Andrew Redleaf, chief executive officer of the Minneapolis firm, said in an announcement that Wood, who is 46, will remain on the board of directors and retain his economic interest in the firm. Redleaf also said Wood is not going to another firm. Charity Aware aims to help young people volunteer at local charities. Whitebox had $2.24 billion under management as of April 30. Wood joined Whitebox in July 2000.

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Sony chief executive Kazuo Hirai told more than 10,000 shareholders who gathered for Thursday’s annual general meeting in Tokyo to be patient regarding Third Point’s proposal to spin off a piece of the Japanese giant’s entertainment business. “This is a very big proposal aimed at Sony’s important business,” Hirai told the audience. “I understand this to be a very important proposal ... It not only involves what Sony is today but also what Sony should be in the future.” He said Sony’s board will solicit outside opinions rather than make a quick decision.

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Brevan Howard Asset Management’s $2.7 billion emerging-markets hedge fund has more than halved its risk after losing 11 percent so far this year. Geraldine Sundstrom heads up the fund, which has been hurt since May, when interest rates started to rise, stocks plummeted and currencies weakened in emerging markets, according to a report.


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Nearly $4 billion flowed into equity hedge fund strategies in May after adjusting for redemptions, reversing this year’s longer trend, according to a new report by eVestment. Even so, equity funds have suffered a net outflow of about $5.8 billion for the year. In addition, commodity funds attracted $2.5 billion more than left their firms in May. As a result, the strategy’s asset flows moved into the black for the year, with a net gain of roughly $2 billion. Managed futures saw a net outflow of $7.24 billion in May, putting the total net outflow for the year at $21.5 billion, the most of any strategy.

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