Billionaire investor Leon Cooperman sees a recession and doesn’t expect a new high in stocks for a long time

Leon Cooperman

Reuters

  • There is no indication that rates of interest are too excessive, Leon Cooperman advised CNBC.

  • With out tighter coverage, a recession continues to be on the desk, and could possibly be ignited by quite a few dangers.

  • The billionaire investor additionally sees a return to this yr’s inventory market highs as unlikely.

Leon Cooperman is holding out on expectations {that a} US recession is forthcoming, noting that he’s among the many few nonetheless calling for increased rates of interest, he advised CNBC on Thursday.

“What is the signal that rates of interest are too excessive?” the Omega Advisors founder requested. “The inventory market’s been going up, the market has a really speculative tone to it. In Georgia, their flash estimate in GDP was like 5%. There is no indication that the Fed is restrictive.”

With out a hawkish Federal Reserve, the billionaire investor expects the US financial system to endure a tough touchdown, naming quite a few components that would push it over the sting. These embody the Fed’s quantitative tightening marketing campaign, the rising worth of oil, or the US greenback.

Up to now, these components have been “moderately nicely behaved,” Cooperman stated, which is why markets have carried out strongly by means of the previous few quarters. As an example, earlier oil worth declines and a weakening greenback have been seen as financial positives, fueling investor sentiment.

However Cooperman cautioned about betting on additional power transferring ahead, and stated he views the S&P’s present worth as too excessive, and its fairness threat premium as too low.

“I do not anticipate we are going to see a brand new excessive available in the market for a very long time. We have had a really unhealthy coverage combine,” he stated.

To deal with this, Cooperman appears for 2 standards when selecting shares: these which might be low-cost and in a position to repurchase their shares.

The investor’s Thursday feedback have been an extension of earlier outlooks he is given, saying in June that the S&P 500’s rally was largely sentiment pushed, and unlikely to repeat January’s 4800 level excessive for a number of years.

Talking with CNBC, Cooperman additionally commented on Nvidia, having beforehand criticized the mania across the chip maker. Whereas the corporate’s inventory has risen 214% this yr on hypothesis that it is going to be a key element of a coming synthetic intelligence period, Cooperman in contrast it to Cisco.

“In 2000, all people was sizzling on the web: Cisco, Cisco, Cisco. Cisco was $80. It dropped 90% to $6 available in the market break when know-how went down,” he stated. “Cisco, 23 years later, continues to be under the place it was in 2000.”

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