Leon Cooperman sees the stock market lower in a year’s time due to taxes, interest rates and inflationary pressures
Billionaire Leon Cooperman told CNBC on Friday that he expected the stock market to be below current levels in a year.
Cooperman’s comments came a day after the S&P 500 closed another record in 2021 and the session ended at 4,211.47 a.m. on Thursday. The broad stock index has risen by around 12% since the beginning of the year and by around 43% in the last 12 months.
“Let’s face it. The market is facing the fact that taxes are rising, interest rates are rising and inflation is rising. And we have a reasonably richly valued market. That’s how cyclical I am. But I keep an eye on the outcome,” Cooperman said in an interview on Squawk Box.
“I suspect the market will be lower in a year from today. But I don’t have to guess now. It won’t end well,” added the chairman of the Omega Family Office. “But nobody, including me, knows when this will end. We are only observing the things that would normally indicate an end.”
Cooperman said he sees himself as a “fully invested bear” while acknowledging that the market has recently “performed better than I thought”.
In an attempt to explain his positioning, Cooperman said, “Bear markets do not arise from flawless design. They arise from certain fundamental reasons,” an impending recession, “a hostile Fed, and” speculative valuation “.
“The market has corrected itself very much in the sense that FAANG stocks are not expensive, but emerging FAANG stocks are very expensive and have been seriously corrected,” he continued. “The entire slowdown in the SPAC space is correcting itself,” he added, saying he does not currently see any conditions that would result in a significant market decline in the short term.
At the same time, Cooperman stressed that the pace of market gains cannot last forever after bottoming in March 2020 following a coronavirus-induced slump.
“I think, however, that we should recognize that we are pulling demand forward and that I don’t think the longer-term outlook is particularly favorable,” he said.
Cooperman said his inflation forecast was different from the view of Federal Reserve Chairman Jerome Powell. The leading US central banker has repeatedly said he thinks inflationary pressures will be “temporary” as the economy recovers from the Covid pandemic, stressing that the Fed expects to keep monetary policy accommodative for the foreseeable future.
“I think Mr. Powell will be surprised by the inflation. It won’t be as calm and fleeting as he thinks. I think the Fed will be forced to say something before the end of 2022,” Cooperman said.