Some of the smartest minds on Wall Street are sounding the alarm on the Trump bump

They're some of the biggest names in investing. They're also warning of increasing risks in the stock market.

US stocks have had a good run since the election of Donald Trump. The promise of tax cuts, repatriation of overseas profits, and deregulation had Wall Street abuzz almost immediately after Trump's win. Financial stocks, in particular, have rallied, with the latest boost coming on the back of Trump's executive order to review the Dodd-Frank rule.

The Dow Jones industrial average hit a landmark 20,000 on January 25, and the Nasdaq composite just hit a new record.

But the speed and scale of the rally — and the realization that Trump's policies aren't just good news for investors — has several influential voices in the market sounding the alarm.

Comments from the White House on issues ranging from currency devaluation to border taxes have put the market on edge. Worry about inflation is emerging, too, and there's also concern about the overheated valuations on stocks.

Here's a roundup of warnings from some of the biggest funds and investors:

More of the rough, less of the smooth

The primary concern among investors is that nothing is going to be as smooth as stock market valuations currently reflect, with investors overlooking the effects of border taxes and trade restrictions on profit margins and global economic growth.

Sebastien Page (T. Rowe Price)

Here's Sebastien Page, head of asset allocation at T. Rowe Price, referring to Robert Shiller's cyclically adjusted price to earnings, or Cape, ratio:

"I don't know what metrics you look at, but the Shiller Cape Ratio is at 28, and if you look back at the 150-year history, there were only two other times that it was higher. The tech bubble in the '90s and then 1929. And it's actually close to where it was in 1929. We use a bunch of evaluation measures, I use that one just as an example."

Page said the stock market has priced in tax cuts, but not delays in implementation. Similarly, it has priced in increased spending on infrastructure even though that faces hurdles to get the go-ahead.

"And we're not pricing in things like the border tax, which really eat into profit margins very quickly, and not only that, but it can start a domino effect with other countries," he said. "That is sort of the uncertainty that is out there."

Seth Klarman (Baupost)

In a letter to investors, famed value investor Seth Klarman, the head of Baupost, made a similar point.

"Exuberant investors have focused on the potential benefits of stimulative tax cuts, while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers," he said, according to The New York Times.

Ray Dalio (Bridgewater)

Ray Dalio, the founder of the giant hedge fund Bridgewater, alluded to this in a letter to investors.

"While there is a lot of potential to improve fiscal policies and make beneficial structural reforms (to enhance the business friendly environment, reduce regulatory inefficiencies, etc.), there is also significant risk that his populist policies could hurt the world economy (and worse)," he said, according to a Bloomberg report.

Nouriel Roubini (Roubini Macro Associates)

Nouriel Roubini, the economist known for calling the financial crisis, is also focused on this risk. He said the US has spooked its trading partners by unilaterally pulling out of the long-negotiated and hard-fought Trans-Pacific Partnership, or TPP.

If pushed further, "America's trading partners will have little choice but to respond to US import restrictions by imposing their own tariffs on US exports," Roubini said. "The ensuing tit-for-tat will hinder global economic growth, and damage economies and markets everywhere."

The end of an era

Trump's election has also seen a remarkable shift in economic predictions, where the market has gone from fearing deflation to expecting a quick rise in prices.

Sebastien Page (T. Rowe Price)

Page told Business Insider:

"One of our team members around the election commented that, 'You know, if you look at the inflation expectations postelection, it looked like Trump had done more for inflation expectations with 2 million red hats that say 'Make America Great Again' than years and years of super-aggressive monetary policy.' So you have to put it in context. But the fact is inflation expectations are picking up."

He added that he considered a spike in inflation a tail risk — the kind of risk that is unlikely but could have "devastating effects."

David Einhorn (Greenlight Capital)

David Einhorn, the founder of the hedge fund Greenlight Capital, also highlighted this risk in a letter to investors, saying fiscal stimulus could add fuel to an accelerating economy and tightening job market in the short term.

"Ultimately, wage inflation could become a drag on corporate profitability, and higher inflation may force the Fed to raise rates substantially, potentially causing the next recession," he added.

Elliott Associates

Elliott Associates, the $30 billion-plus hedge fund led by Paul Singer, has also sounded the alarm on the risk of inflation. In a letter to investors reviewed by Business Insider, Elliott said (emphasis added):

"There is a deep underlying complacency which we think permeates global financial markets. The basically low volatility of the last eight years has led to a widespread assumption that financial market volatility has been bottled and will remain controlled.

"Moreover, despite the radical monetary policy which has become orthodoxy for the entire developed world's central banks, there is no fear of a near-term eruption of significant systemic price inflation. It is a fool's errand to predict the near-term course of inflation (and global central bankers and policymakers have failed miserably and continuously in performing this errand), but we believe that the global confidence in the placidity and boundaries of inflation (and global financial risk) is misplaced and overdone."

Trouble in the bond market

A pickup in inflation spells bad news for the bond market, as it means the Federal Reserve may be forced to lift rates more quickly than expected, crushing investors who bought bonds in the period of extremely low interest rates.

"In our conversations with investors, a popular narrative has re-emerged: the (not so new) conviction is that the market may be grossly underestimating US/Fed rate risk," Themos Fiotakis and his team at UBS said in a note.

Rebecca Patterson (Bessemer Trust)

Then there is the risk of uncertainty at the Fed. Rebecca Patterson, the chief investment officer of Bessemer Trust, told Business she's worried about bond market volatility later this year as Federal Reserve Board Chair Janet Yellen's term gets closer to expiring in 2018.

"Remember it was August 2015 and there were worries about who was going to take over from Bernanke," she said, referring to former Fed Chair Ben Bernanke. "There was a lot of disagreement whether it would be Larry Summers, Janet Yellen, or someone else, and the bond market volatility exacerbated the equity market volatility at the time.

"I don't think the market is adequately focused yet on the possible bond volatility we could get later this year," she added.

Oh, and there's China, too

Then there is China. Much of the world is focused on what Trump says, does, and tweets, but the Asian giant remains a key risk.

Sebastien Page (T. Rowe Price)

"If China experiences a significant growth slowdown, that's not only risk, but it's a tail risk," Page said. "It could be drastic. But we're not really considering it right now because of those high stock valuations."

Elliott Associates

Singer's hedge fund is also concerned.

"There are rumblings coming from China which could mean nothing, or could portend changes in the economic and financial market outlook that potentially swamp, in magnitude and impact, all" other factors, Elliott wrote in an investor letter in January.

The hedge fund said:

China "has shown signs of fraying, and despite the fact that China is not a free society and that one can only accumulate significant wealth with the permission of the authorities, questions are arising about the ability of the authorities to control and direct to a safe landing this next phase, whether you want to think of the next phase as a speed bump or Armageddon."

The letter added that "China should be near the top of the 'must-monitor' list for every businessperson, investor, and trader."

Rebecca Patterson (Bessemer Trust)

China also has the potential to wreak havoc by engaging in a tit-for-tat trade war, according to Patterson:

"China is not nearly as reliant on exports to America as Mexico is. So if we go after China, I don't think they are just going to sit there and take it. They're going to retaliate in some fashion. They could threaten to lighten the amount of US Treasurys they hold, or they could devalue their currency to offset any tariffs we place on them.

"They could also retaliate in a more indirect way. It could be militarily in the South China Sea by taking a greater stand there, for example. There's lots of things they can do."