Blackstone President and COO Tony James said Tuesday stock market valuations are ahead of themselves, and a correction is coming.
James ticked off a number of headwinds: the impact of the Paris terror attacks, higher U.S. interest rates on the horizon, weaker growth in China and problems in South American economies.
"The cumulative effect of that is, where do you look for good news that's not already reflected in the market? Earnings of the are flat at best, so I think stock prices have had a great run and it's time for a pause," he told CNBC's "Squawk Box." "We see a bit of a correction coming."
Blackstone has exited "a lot of investments" where it can and is poised to take advantage of a correction with "a lot of capital," he said.
Stock markets rallied on Monday, with the Dow Jones industrial average and posting their best day since October. The Dow is about 4.8 percent off its 52-week high, and the S&P is 3.9 percent below that level.
Though James counted an interest rate hike among near-term headwinds, he said the United States is way overdue for higher rates. The Federal Reserve has kept its benchmark fed funds rate near zero since December 2008 in a bid to encourage lending and boost the economy.
However, James said he does not believe low rates are helping the economy.
"I actually don't think zero rates have ever helped an economy. If anything, you could argue zero rates cause misallocation of resources and cause companies to substitute capital for labor, and it actually hurts jobs," he said.
"I think the market wants the Fed to get on with it."
The CME's FedWatch tool, which measures Fed funds future prices, puts the likelihood of a rate hike in December at 74 percent.