Hedge fund billionaire David Tepper warns the Federal Reserve against further rate cuts, fearing inflation and economic risks. Tepper advises caution, saying excessive easing could lead to dangerous territory. President Trump pressures Fed Chair Jerome Powell for aggressive cuts despite Powell citing “risk management” as the reason for the recent rate reduction.

Tepper believes cutting rates while inflation is not fully under control could lead to increased demand outpacing supply, reigniting price pressures. He warns that easy monetary policy might create asset bubbles as investors flock to riskier markets. Tepper emphasizes the importance of maintaining a slightly restrictive policy to prevent a weaker dollar and more inflation.

Despite high valuations, Tepper remains bullish on stocks as long as the Fed continues easing. The S&P 500 trades at almost 23 times forward earnings, with tech giants like Nvidia and Microsoft sporting sky-high valuations. Tepper expresses concern over expensive levels but acknowledges the necessity of owning stocks in a market anticipating further rate cuts.

Tepper, the owner of the Carolina Panthers, has been actively trading his Nvidia position. Appaloosa Management held approximately $277 million worth of Nvidia at the end of June, making it the fund’s seventh largest position. Tepper mentions fluctuating in and out of Nvidia, indicating a strategic approach to managing his holdings.

Read more at CNBC: David Tepper says Fed could cut a few more times, but easing too much risks entering ‘danger territory’