Skybridge Capital co-CIO Troy Gayeski makes a hell of a lot of sense to this journalist pounding the pavement in Davos at the World Economic Forum. And it’s not because of lack of sleep from what is an around the clock gathering of elite business minds in the Alps.

No, quite the contrary.

It’s because Gayeski’s (who is an upbeat guy by nature based on our interactions in the past) take on the markets is rationale and appears to be where we are headed thanks to a helping hand of interest rate cuts from the Federal Reserve.

“If anything, this could be 1999 on steroids. We hope we don’t end up with bubbles. What the Fed is doing now is running the medium-term risk of bubbles in equities, corporate credit and commercial real estate in order to further reduce the near-term risk of recession,” Gayeski told Yahoo Finance in an interview at WEF. “It’s a dangerous game the Fed is playing.”

Gayeski is quick to point out that the Fed slashed interest rates three times and expanded its balance sheet in 1998. As we all know, that was one of the key drivers in the epic run-up in stocks in 1999 (of mostly crappy money-losing internet companies no less) that went on to create the 2000 internet bubble bursting. This time around, the Fed has also cut rates three times (in 2019) and in turn, has triggered a major run in equities that has taken the S&P 500 to over 20 times earnings on a P/E basis.

it’s expensive by any means.

And particularly expensive in light of our discussions with top executives here at WEF. While corporate chieftans have said U.S. economic growth has picked up a touch relative to the fourth quarter of 2019, it’s far from the hardcore acceleration that is priced into risk assets. Sooner or later something has to give — it’s likely it will give first in equities.

The strategists at JPMorgan Chase raise similar concerns to Gayeski’s.

“We and others have observed that market returns are overshooting the improvement in key activity data like PMIs by an extraordinary degree,” wrote JPMorgan Chase strategist John Normand in a new note to clients this week. Normand added stock price momentum right now looks too “exuberant.”

Watch Yahoo Finance’s full live network coverage of the 50th Annual World Economic Forum from January 21-24 here.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Watch The First Trade each day here at 9:00 a.m. ET. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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