Billionaire investor Leon Cooperman forecasts that the inventory market and its hefty valuations may see losses this 12 months, whereas long-duration Treasury yields may take a look at larger once more. “Everybody came into 2023 with a very negative view, and the market went up quite a bit. Everybody is now positive, and so my guess is that by the end of the year, maybe we will go down,” Cooperman mentioned Tuesday on CNBC’s ” Squawk Box .” The chair and CEO of the Omega Family Office mentioned traders have been too optimistic in regards to the variety of charge cuts the Federal Reserve will enact this 12 months. He thinks the central financial institution could not slash brief charges sufficient to fulfill traders. “I think the Fed will cut short rates, maybe two or three times. Forget the six times that the market was discounting, but I think the long end will go up,” Cooperman mentioned. “The 10-year [at] 4%, 5% or higher would not be a big surprise.” The market’s momentum has eased recently as hopes for charge cuts pulled again. Fed Chair Jerome Powell mentioned in late January {that a} March charge reduce is unlikely , triggering the largest day by day loss since September for the S & P 500. Powell added to that sentiment in an interview aired Sunday on CBS’ “60 Minutes” throughout which he mentioned indicated the Fed would take a cautious method on cuts. Cooperman identified that the S & P 500 is now buying and selling at 21 instances ahead earnings, which appears unsustainable. The fairness benchmark is up 3.6% 12 months thus far, following a 24% rally in 2023. “You see the market multiple 21 times. It seems too rich to me,” he mentioned. Not a purchaser of bonds Another issue that might drive lengthy charges larger is the burgeoning U.S. fiscal deficits, Cooperman added. The U.S. authorities ran up one other half a trillion {dollars} in pink ink within the first quarter of its fiscal 12 months. The soar within the deficit pushed complete authorities debt previous $34 trillion for the primary time. “Given the amount of debt that we’re creating in the system, I wouldn’t be a buyer of government bonds at these levels,” Cooperman mentioned. Another large investor, Paul Tudor Jones, on Monday mentioned he agreed with Powell in considering that the federal authorities is on an unsustainable fiscal path. Cooperman additionally charged that inflation remains to be too excessive regardless of the Fed’s sequence of aggressive charge hikes. However, he isn’t anticipating a recession this 12 months. Inflation as measured by core private consumption expenditures costs rose 2.9% in December from the prior 12 months, the bottom since March 2021. “I think we’re going to have inflation,” Cooperman mentioned. “I’m not calling for recession. We borrow for the future. That’s why the market has done so well …I believe that one should have a cautious view.”
https://www.cnbc.com/2024/02/06/leon-cooperman-says-too-rich-stocks-to-go-down-and-long-term-rates-could-go-higher.html
