Carl Icahn says there 'very well could be a recession or even worse'

Famed investor Carl Icahn said Tuesday an economic downturn could be on the horizon and he is loaded on protection against a steep sell-off in the market.

"I think there very well could be a recession or even worse," Icahn said on CNBC's "Closing Bell Overtime" to Scott Wapner. "I have kept everything hedged for the last few years. We have a strong hedge on against the long positions and we try to be activist to get that edge... I am negative as you can hear. Short term I don't even predict."

The founder and chairman of Icahn Enterprises said surging inflation is a major threat to the economy, while the Russia-Ukraine war only added more uncertainty to his outlook.

The Federal Reserve raised interest rates for the first time in more than three years in an attempt to battle inflation that is running at its highest level in 40 years. Fed Chairman Jerome Powell this week vowed tough action on soaring prices, indicating he's open to rate hikes more than the traditional 25 basis points.

"I really don't know if they can engineer a soft landing," Icahn said. "I think there is going to be a rough landing... Inflation is a terrible thing when it gets going."

Icahn, a longtime activist investor and so-called corporate raider, said he believes the system of company boards needs to be fixed and weak management could lead to disasters.

"There's no accountability in Corporate America. You have some very fine companies, some very fine CEOs, but far too many that are not up to the task," the longtime activist investor said.

To position for a recession in America, Icahn said he's betting against malls and commercial real estate.