(Bloomberg) — To crypto true-believers, meme traders, and Elon Musk fans, hedge fund titan Paul Singer can’t wait to say, “I told you so.”Offering a curmudgeonly riposte to today’s raucous financial markets, the 76-year-old billionaire said in a letter to clients of his $42 billion Elliott Management Corp. that a “flamboyant line-up” of excesses will come back to haunt investors. To Singer, who has long warned of an ugly end to the Federal Reserve’s easy-money policies, it’s all just a bit too much.“We believe that hindsight will show the champion of head-smacking craziness in the American stock market to be the period playing out right now,” Singer wrote in the Jan. 28 letter.In his view, the Fed’s current iteration of quantitative easing paired with trillions of dollars of stimulus to counter the pandemic are setting things up for a fall. Rampant inflation will shock policy makers, stock pickers and bond investors, alike.“‘Trouble ahead’ is signaled by a rare combination of low-quality securities, staggering valuation metrics, overleveraged capital structures, a scarcity of honest profits, a desperate dearth of understanding evinced by the most active traders, and economic macro prospects that are not as thrilling as the mobs braying ‘Buy! Buy!’ seem to think,” he wrote.Singer Says Long-Term Bonds Are a ‘Senseless’ Speculative TradeMarkets have begun to show cracks in recent days. Benchmark 10-year Treasury yields catapulted to their highest in more than a year, equities tumbled, and traders yanked forward their opinion of how soon the Fed will tighten monetary policy.While pledging to stick to the basics at his multistrategy operation — which has lost money in just two years since its 1977 inception — Singer exuded frustration at what he sees as the hysteria driving everything from Bitcoin to government debt — a “return-free risk,” as his letter put it.Elliott made money every month in 2020, even in the March rout, gaining 12.7% for the year, thanks to “a combination of portfolio-protection trades related to interest rates and gold, together with our core activities” including distressed debt, equity activism, and private equity.The firm has registered annualized gains of about 13% in its 44 years, beating the S&P 500 Index.For a “reality check” on U.S. stocks, he pointed to Musk’s Tesla Inc., which trades at about 1,000 times earnings while “every other major carmaker in the world is rolling out electric vehicles in the near future.” Addressing its shareholders, “good luck ‘you few, you happy few, you band of brothers’ and sisters,” he wrote.But nothing has exercised the Republican donor like the boom in cryptocurrencies, which he has long called a fraud. Bitcoin has soared almost 70% this year alone and reached a record $57,350 on Feb. 21. Watching the digital currency rocket on the back of stumulus measures had the fund manager grasping for coping mechanisms.“Pulling out your hair is an option, though only if you have hair to spare,” the mostly bald Singer wrote. “Hiding under the bed to avoid people who gloat about being long Bitcoin can get…tiring. Deep breathing exercises can work, but only for short periods. We continue to press on for the day when we can say, ‘We told you so.’”And even as the world begins to recover from the pandemic, Singer urged keeping expectations in check. Certain industries and activities, like commercial real estate, movie theaters, retail, restaurants and business travel, will continue to be significantly challenged — in some cases permanently, he said.In the meantime, he wrote, the recovery will be stymied by virus variants and policies “that sometimes seem governed by short-term political pressures rather than what is best for society, short and long term.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.