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Why Carl Icahn Expects a Big Correction in the Stock Market

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Dec. 8 2017, Published 10:19 a.m. ET

Carl Icahn in an interview with CNBC

On Thursday, November 30, 2017, Carl Icahn, billionaire investor and founder of Icahn Enterprises, shared his views on market movement, bitcoin, and his position in 3Q17 in an interview with CNBC’s Halftime Report.

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Icahn on market movement

Icahn said in the interview, “I really think even though earnings are going to be very good … I just think this thing has gotten into a euphoric state.” We’ve seen in the last three quarters that the S&P 500 Index (SPX-INDEX) has had strong improvement in earnings. Most of the companies of the index (SPY) have also been improving their demand outlook.

Major US economic indicators such as inflation, retail sales, consumer confidence, consumer spending, and the labor market are improving significantly. A constant improvement in these economic indicators signals that country’s short-term economic outlook is improving gradually.

Other major US indexes are also making new highs daily. The broader market S&P 500 Index (QQQ) (IWM) has risen 17.8% so far in 2017 as of December 7 and reached a record high of 2,665 on December 4, 2017. The Dow Jones Industrial Average Index (DJIA-INDEX) rose 22.5% during the same period.

But the continuous new high in the equity market could be dangerous for investors. Icahn said, “It’s run away and there might be a big correction but I can’t say it’s insane.”

In the next part of this series, we’ll look at Icahn’s new position in SandRidge Energy (SD).

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