- Leon Cooperman has said that the US economy will enter a recession and that stocks will fall much further.
- The billionaire investor told CNBC on Tuesday that the S&P 500 would fall 40% in total peak down.
- He said the index may not recover until it reaches 3,000, 20% below Monday’s close.
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US equities have a long way to go, according to hedge fund veteran Leon Cooperman, who has predicted that the economy will fall into recession in 2023.
Cooperman told CNBC on Tuesday that he thought the S&P 500 would fall a total 40% as a recession would affect corporate profits. He said the stock is unlikely to return to a bullish market soon.
Investors have taken action in 2022 as the Federal Reserve has embarked on what is likely to be one of the fastest rising interest rate cycles in its history in an effort to control rampant inflation.
The S&P 500, the U.S. benchmark index, had fallen 21% this year to Monday’s close. That goes from a low of just under 4,800 in early January to 3,761 at the close of the game on Monday.
Cooperman told CNBC he thought the S&P 500 would fall 40 percent from its January high overall. He said it is likely to fall to 3,000 before it starts to recover, 20% below Monday’s closing level.
The investor predicted that the US would fall into recession next year, either as a result of rising oil prices or because of rising Fed interest rates.
“My basic view is that the S&P’s 4,800 is likely to be the highest for quite some time,” Cooperman told CNBC’s “Squawk Box.” “I think we’re going to go through a long period of low returns while we try to tidy up the ship.”
Cooperman founded the Omega Advisors hedge fund, which he now runs as a family office. Forbes estimates that it has a net worth of $ 2.5 billion.
Explaining his prediction that stocks would fall further, Cooperman said corporate profits, a vital ingredient in stock prices, typically fell by about 20% during recessions.
Cooperman said much of the speculative foam was being removed from the market. He gave the example of the cryptocurrency exchange Coinbase, which has dropped by about 86% from its maximum.
“I think we’ve gone through one of the most speculative periods I know of, you know, SPACs and all that shit going on, cryptographic and non-fungible tokens and stuff like that,” Cooperman said.
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