David Tepper was probably riding high after his Carolina Panthers bested the Dallas Cowboys in Sunday’s NFL season opener until Thursday afternoon, when he was forced to reckon with the fact that he’s been underweight US equities since he predicted back in April that the “highs are in.”

Of course, Tepper isn’t the only hedgie who dialed back his exposure after February’s volocaust whiplashed many funds and forced them to adopt a defensive posture as they waited for the other shoe to drop. And he deserves at least some credit for readily admitting during Thursday afternoon’s interview with CNBC’s Scott Wapner that he’s only been “about 25% exposed” to US equities – which, in retrospect, is about 75% short of the ideal allocation.

I probably don’t have enough exposure I’ve taken down my exposure. So I’m still long. But you know, not – I would in percentage terms of s&p-type exposure, might be 25% or something of that. And that’s been wrong, because the market has been very hot and the problem for people like me is I’ve had that express with long individual stocks and short you know, futures of some sort or the market in some fashion. And quite frankly our stocks have not done that well this quarter. Which you probably know, you’re going to ask me next or something like that, right

All things considered, assuming the market was fairly valued, a reasonable investor might expect to reap returns of up to 8% over the next year. But Tepper feels like some caution is warranted, which is why he still has cash he can put to work. Because anybody who has taken the president at his word would probably agree that the market has been too naive in pricing in the possibility that Trump’s trade conflict with China will come to an amicable resolution. In fact, Tepper said, he’s been surprised by investors unflinching optimism in the face of a conflict that could potentially disrupt the global free-trade order – particularly after Trump’s declaration that he’s ready to slap tariffs on another $267 billion worth of Chinese goods.

Trump, Tepper believes, will probably slap tariffs on most, if not all, of the Chinese goods streaming into the US. And when that happens, stocks could experience a pullback in the range of 5% to 20%.

Yeah. I have cash I can put to work.Listen I can change things very fast, okay, if we did something, china was solved, somehow which I don’t think is so easy to do. It may be this, we may have to get used that the tariffs just may be on, okay? Then there will be an adjustment in the stock market. Whatever it is, a 5%, 10%, to whatever, 15%, 20% adjustment. Then you’ll move up from there and look, that’s what will be. You know whatever that adjustment, because the currency adjusts, that’s what will happen if that’s the way it goes.

Tepper has taken some widely publicized swipes at President Trump’s trade policies in the past. But when asked for his assessment on the administration’s policies – and, more to the point, whether they’ve been responsible for the market’s resilience (not to mention the booming economy – Tepper had a few kind words to say about Trump and his policies.

While he isn’t convinced that Trump’s confrontational trade policies were the best response, as a “patriotic American” Tepper agreed that something needed to be done about China’s predatory IT policies.

Tepper: I’m a little surprised at the level it is right now. Okay a little surprised I’m not totally surprised. But a little surprised like I said, I don’t think everything is discounted in this price right now. I do think if you do get — again, I’m, listen, I’m a very patriotic American citizen, okay I do think we have to protect our national jewels, our technology so this is a very serious matter when you have very serious matters, sometimes you might have it take a little pain it’s just the way it goes. And I don’t know if this is the right strategy or not. That we’re taking, but we may have to. If it is the right strategy, it’s the right strategy. And we got to make a point I think that that’s not wrong because it’s been going on, I mean listen, as you asked me, trying to avoid it you asked me about some of my stocks, micron. Micron has a very famous case where they stole technology in Taiwan.

Wapner: Been getting beaten up a lot lately.

Tepper: I’m talking about the technology stuff. Absolutely happened in Taiwan with a Chinese basically were trying to steal technology from micron that can’t happen. We can’t allow that to happen. There’s other cases across the country I could bring up and stuff. We have to figure out a way to stop them and there’s been other things where they force the technology transfers I don’t know if this is the right policy but attacking it is not wrong. I think that is probably right policy.

To be sure, Tepper is also anxious about Trump’s decision to blow out the budget deficit, particularly at a time when growth was already robust as the economic expansion enters its ninth year. But will there definitely be a reckoning for these rising debt levels? It’s certainly possible, Tepper said. But as for when that reckoning will arrive, it’s just too difficult to try and time it. Particularly after the market and economy have proven so many doomsayers wrong.

Watch some excerpts from Tepper’s interview below:

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