Leon Cooperman Predicts Stock Market Downturn, Foresees Rise In Long-Term Rates: 'I Believe That One Should Have A Cautious View'

Renowned investor Leon Cooperman has issued a warning about the stock market, citing the potential for a downturn. He also anticipates a rise in long-term interest rates.

What Happened: Cooperman, the chair and CEO of the Omega Family Office, expressed his concerns about the stock market’s future during an interview with CNBC's "Squawk Box" on Monday. He believes that the current stock prices are too high and could soon experience a decline. Additionally, he foresees the possibility of long-term interest rates increasing.

Cooperman’s remarks come at a time when the stock market has been displaying resilience, despite concerns about inflation and the Federal Reserve’s monetary policy.

"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 said. "The 10-year [at] 4%, 5% or higher would not be a big surprise."

"I think we're going to have inflation," Cooperman said. "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."

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Why It Matters: Cooperman’s warning is significant given his track record and the current market conditions. In January, top investors were confident that the market would not face a recession in 2024, with many backing the “long Magnificent Seven” trade. However, Cooperman’s recent warning suggests a potential shift in market sentiment.

Cooperman’s concerns also align with those raised by other market experts. Fund manager Cole Smead warned that the U.S. stock market could be in a precarious position due to robust job numbers and wage growth, which suggest that the Federal Reserve's interest rate hikes may not be having the desired impact.

However, not all market experts share this pessimistic view. Fundstrat’s Tom Lee highlighted the stock market's strength in 2024, despite concerns about corporate earnings and the timing of Fed rate hikes. The Fed's recent meeting suggested no imminent rate cuts until inflation is under control, a sentiment echoed by Fed Chair Jerome Powell in a "60 Minutes" interview.

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