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Billionaire David Tepper: I'm generally 'pretty cautious on the market'

Hedge fund billionaire David Tepper told CNBC on Monday he is "pretty cautious" on the market right now.

In an interview with Scott Wapner on "Halftime Report," the founder of Appaloosa Management said the current environment is "difficult" but hedge funds can still make "OK" returns.

While wages and the strength of the dollar are pressuring margins, Tepper said investors also have to deal with the backdrop of uncertainty surrounding the election.

"Depending on the outcome of the election, the market can move different ways. So, generally speaking, pretty cautious on the market, not outright bearish on the market," he said.

Tepper said that, at the moment, his fund, which has about $19 billion in assets under management, is "pretty light in the stock market and we have a lot of cash."

If the market goes down because of the election, Tepper said the Federal Reserve will also be less likely to raise its benchmark federal funds rate. But if the market holds at current levels, Tepper said the central bank will likely raise rates because the economy is "at a point where they should raise rates."

"But if you do get some sort of mixed government or something that's near what's going on right now ... then you'll get some relief after this election's over. I think they have to anticipate business investment going up, especially if you have more or less of a status quo economically," Tepper said. This would include the Republicans retaining their control over the House, he added.