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The threat of increased tensions between the United States and China could lead to a drop in stocks more than many expect, according to a hedge fund veterinarian.
In an interview with CNBC's "Half-Time Report" on Thursday, Appaloosa Management co-founder David Tepper warned that stocks could fall by 5% to 20% if the trade war with the economic engine Asian was deteriorating.
(See also: The Bear market will paralyze stocks for years: Morgan Stanley.)
The manager does not fully take into account the commercial threat
"We may have to get used to these rates," said the hedge fund titan. "Then, there will be an adjustment in the stock market, so you will go up and down."
Last week, President Donald Trump said he was ready to issue taxes on Chinese goods worth $ 267 billion, in addition to a series of proposed tariffs targeting 200 billions of dollars worth of goods. Despite escalating trade war, US stocks are still trading at record levels, Tepper said. The S & P 500 is up 8.4% from the beginning of the year to Friday afternoon, while the Nasdaq Composite Index posted a return of 15.7% over the same period.
"I'm a little surprised by the level [that the market] is now, "said Tepper. I do not think everything is reduced to this price right now. "
The hedge fund manager is described as a "patriotic American citizen," adding that "we must protect our national jewels: our technology" and that we may have to "take a little trouble" to do so.
In January, Mr. Tepper told CNBC that this bull market has room for maneuver thanks to lower taxes and favorable stock valuations. On Thursday, the hedge fund manager said the current bull market, more than a decade old, was at the "end of the heats" and because of his unfavorable outlook, he had leveraged some of his investments. .
Appaloosa Management of Tepper manages approximately $ 14 billion of assets.
(For more, see also: Stay in small caps, even if you are trading.)
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