Billionaire investor Leon Cooperman instructed CNBC on Friday he expects the inventory market might be decrease than present ranges one 12 months from now.
Cooperman’s feedback got here at some point after the S&P 500 notched yet another record close in 2021, ending Thursday’s session at 4,211.47. The broad fairness index has risen roughly 12% 12 months up to now and about 43% previously 12 months.
“Let’s face it. The market is going through the truth that taxes are going up, rates of interest are going up, and inflation goes up. And now we have a fairly richly appraised market. So cyclically I am engaged. However I bought an eye fixed on the exit,” Cooperman mentioned in an interview on “Squawk Box.”
“I think the market might be decrease a 12 months from at the moment. However I haven’t got to make that guess now. This isn’t going to finish properly,” the chairman of the Omega Household Workplace added. “However no person, myself included is aware of when that is going to finish. We simply watch the issues that might usually indicated an finish.”
Cooperman mentioned he considers himself to be “a completely invested bear,” whereas acknowledging the market has recently “executed higher than I might’ve thought.”
In an try to clarify his positioning, Cooperman mentioned, “Bear markets do not materialize out of immaculate conception. They arrive about for sure elementary causes,” such an impending recession, “a hostile Fed and “speculative valuation.”
“The market has been very self-corrective within the sense that the FAANG stocks will not be costly, however the aspiring FAANG shares are very costly they usually’ve been corrected in a critical manner,” he continued. “The entire slowdown within the SPAC space is self-correcting,” he added, saying he would not see the situations at the moment that might result in a major market decline within the close to time period.
On the identical time, Cooperman confused that the tempo of positive aspects the market has seen after bottoming out in March 2020 following a coronavirus-driven plunge can not proceed endlessly.
“Nonetheless, nonetheless — that is the large nonetheless — I believe we should always acknowledge we’re pulling demand ahead and that the longer-term outlook will not be notably favorable, in my opinion,” he mentioned.
Cooperman mentioned his forecast on inflation is totally different from Federal Reserve Chairman Jerome Powell’s view. The highest U.S. central banker has repeatedly mentioned he thinks inflationary pressures will be “transitory” because the economic system recovers from the Covid pandemic, whereas stressing that Fed expects to maintain financial coverage accommodative for the foreseeable future.
“I believe that Mr. Powell might be stunned by inflation. It isn’t going to be as quiescent and transitory as he thinks. I believe the Fed might be pressured to say one thing earlier than the tip of 2022,” Cooperman mentioned.