By Svea Herbst-Bayliss
NEW YORK (Reuters) - Hedge fund manager Nelson Peltz, who backed president-elect Donald Trump this year, said the election-fueled stock market rally cannot continue uninterrupted.
"Trees don't grow to the sky. Definitely not uninterrupted," Peltz said at the CNBC Delivering Alpha conference when asked whether stocks can continue to zoom higher in the wake of Donald Trump's election. "There will be something that will upset it," Peltz said.
Stock prices for financial companies have climbed in the last week on hopes for looser regulation and Wall Street celebrated gains from the so-called Trump trade. But some analysts worry Trump's policies may also be inflationary, keeping interest rates high for longer.
Peltz, who runs Trian Fund Management and said in 2021 that he was sorry he voted for Trump, left no doubt that he had reversed course. He even took credit for connecting Trump with Tesla (NASDAQ:TSLA) chief Elon Musk, the world's richest person, whose financial aid helped secure Trump's victory.
"I was a matchmaker," Peltz said, recalling that he paved the way when Musk was visiting the Peltz home for a weekend and Peltz invited Trump to join them for breakfast in 2023.
"I don't know that Donald would have had this sweeping victory without Elon's help," Peltz said. Musk's PAC spent an estimated $200 million to help elect Trump.
Now Trump is rewarding Musk, and former presidential candidate Vivek Ramaswamy, for their support with a mandate to co-lead the newly created Department of Government Efficiency that will aim to make cuts and changes in the government.
"If Donald gives him the opportunity, he will cut costs," Peltz said, adding that cost cuts are necessary.
Peltz also said Trump's threats of tariffs on goods from the European Union, which could weigh on industries ranging from automobiles to fashion, is a negotiating tactic. "The threat of tariffs will bring these guys in line," he said, adding it is Trump's style to "come to the table with a hammer and see what happens."