NEW YORK (TheStreet) -- Founder and chairman of Icahn Enterprises(IEP) - Get Report and billionaire activist investor Carl Icahn appeared on Bloomberg TV's "Bloomberg Markets" Tuesday to say that he has cut back on capital spending, because he's concerned about regulations from agencies such as the EPA and because of the overvalued market.
"I'm scared of what the EPA is doing on this stuff and if I'm scared, imagine what these small businesses feel like," he told Bloomberg News' Erik Schatzker. "They are killing small businesses."
While some regulation is needed, a lot of the regulations have "run amok," Icahn explained. This has killed capital spending and as a result, decreased jobs for the middle class.
"If you have better regulation, things would be better, but what they're doing today is crazy and that's why there are no jobs for the middle class - because there is no capital spending," he said.
Secondly, valuation is so high that Icahn doesn't feel comfortable making any large investments.
"I am more hedged than I have ever been before," he told Schatzker.
The overvalued market is mainly a result of zero interest rates and money going into a lot of buybacks, rather than capital spending, he said.
"Think of it as a rich family that decides they're just going to have a lot of fun and sit around the pool and keep printing up IOU's throughout time because they have a good name. And they keep doing it until they go broke," Icahn explained.
Similarly, zero interest rates are creating huge bubbles, he said.
When his retired friends come to him and ask what stocks they should invest in because they can't live off of zero interest rates, Icahn asks them "What's better, 0% or losing 30%?"
But the overvalued market will not stay high forever, Icahn warned.
"There's going to be a day of reckoning here. I've seen it many times in my life. When things look good, they look great, but that's when you have to pull back and stop buying," he said.
While there are too many variables at play to predict when it will happen, the point is that it will happen and that the economy has to change directions, Icahn implored.
According to Icahn, Republican presidential candidate Donald Trump is the one who can help the U.S. economy recover by reigning in the regulations, which will then boost capital spending and cause the market to fall back down. "I very much would like to see Donald Trump win this because I think he's the only hope to save business in America the way we know it. I really mean that," he said.
In the last quarter alone, capital spending dropped by 4%, which Icahn said is "unheard of outside of a recession."
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings team rates Icahn Enterprises as a Sell with a ratings score of D. This is driven by multiple weaknesses, which the team believes should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks the team covers.
You can view the full analysis from the report here: IEP