- Carl Icahn brushed off Thursday's stock surge, warning inflation remains a grave concern.
- He cautioned the FTX fiasco could hit other assets, and teased previous bets against crypto.
Carl Icahn shrugged off the stock market's epic rally on Thursday, warning inflation remains one of many threats facing the US economy. He also teased a past bet against cryptocurrencies, and revealed he was planning to launch an activist campaign against Twitter before Elon Musk stepped into the picture.
US stocks surged the most in two years after inflation data came in below forecasts, raising investors' hopes that the Federal Reserve will pivot from raising interest rates to cutting them, and the US economy will avoid a recession.
However, Icahn told CNBC that he doesn't expect prices, which rose 7.7% on an annualized basis in October, to stop soaring anytime soon.
"You can't wave a magic wand and get the inflation over with," the billionaire investor said, noting the same problem lasted for years in the 1970s.
"The Fed has to keep raising and if it doesn't, then it's going to be worse in the future," the Icahn Enterprises chief said about inflation. "It's not something where you just take a magic pill and get rid of it."
The US central bank has hiked rates from near zero in March to a range of 3.75% to 4% today, and signaled rates could peak above 5% for the first time since 2007.
Icahn listed higher rates, lackluster earnings, ballooning corporate debt, pressure on household wealth, a likely recession, and the Russia-Ukraine war as just some of the reasons he's pessimistic about the future.
"I am still quite bearish on what is going to happen," he said, adding that he's more short the market today than usual. Most of his short positions are against the S&P 500, as he believes Big Tech stocks are overvalued, he noted.
"A lot of things have to happen to turn this economy around, to get us out of a recession," he said.
Icahn warned the crypto crash this week — sparked by the implosion of Sam Bankman-Fried's digital-asset exchange, FTX — could spill over into other asset classes. He studied digital assets like bitcoin but couldn't grasp their value, he said, meaning he didn't invest and perhaps bet against them instead.
"I never bought any crypto," he said. "In fact, I might have shorted it once or twice."
Betting on Twitter
Icahn revealed he was building a Twitter stake, and preparing to push for changes at the social-media company, before Musk offered to buy it in April.
"I was gearing up and looking at it and thinking," Icahn said. "The stock went down a little bit, so I was starting to buy stock, then I felt I would try to get on the board of it."
The activist investor said he shared Musk's view that Twitter's moderation was too restrictive, and its users should have greater freedom of speech.
"I was really happy that Musk came along," Icahn said. "He was the perfect guy for doing it."
Icahn might have even joined Musk's bid for the company, but he never received an invite, he noted.
"I might have done it if he called me," he said. "I might have put $1 billion in it."
While Icahn didn't partner with Musk, he still made an estimated $250 million on the stock, after plowing around $500 million into it this year.