Billionaire investor Leon Cooperman: We're heading into a financial crisis in this country

Joining us now for his take on the markets, the Fed much more Leon Cooperman, Omega family Office Chairman and CEO and and Lee, you’re on the record and, and we’ve we’ve worried about debt. I I remember the Pete Peterson Foundation and having David Walker on and we have worried forever about it and it it continues to climb. I know it’s, it’s something that does stick in your craw and makes you at least nervous that at some point it’s going to come home to roost. I don’t know when, I don’t know if you do either, but you’re not in cash. So we’re going to go over some of some of the stocks that you own. But, but can you just give us your your outlook near term and intermediate term on, on this market, which is down in the last couple of weeks? Is this finally A reckoning with that or, or something else? Well, I think there’s a lot of things going on in the world. You know, we have an election coming up in November. You have two candidates that are generally viewed as, you know, one is bad and the other one is worse. We don’t want to see these guys run. But, you know, I’m hoping that they they drop out and that’s a hope rather than in the forecast. You know, and I would say that the debt situation, you’re right, I’m concerned. I think we we’re we have a system of leadership in this country that has evolved to a leadership crisis. On your program a number of months ago, you had Mitt Romney and a fellow from Virginia Mansion. They basically endorsed Simpson Bowles, which was, I think about eight or nine years ago. The only problem, there’s nothing we’ve done about Simpson Bowles Report. And the problem is 3 times larger than that. But you have no idea when the stuff hits the fan. And I remember very finely how Pete Peterson and Joe Fowler, former Secretary of the Treasury, who was a Goldman Sachs partner, a very real gentleman, ran full page ads in the World Trade journaling the public and the evils in the budget and trade deficit. It was 1972. Here we are 50 years later, and the only significance in the deficit is we have the lowest interest rates in the history of the world. So nobody knows when the stuff hits the fan. But ultimately, either if deficits don’t matter and some people insist, then I’ll be too conservative. But if deficits matter, and I think they will, ultimately I think we’re heading to a financial crisis in this country. But we have a, we have a deficit that is very large at a time when the economy is reasonably fully employed. You give the Fed what kind of grades, Lee? And, and I, I know you’re, I give the Fed, I give the Fed a low grade. You know, I think you know, what I would say is they held interest rates at near 0 for 10 years. And at the time, Powell said to the public, you know, the stock market is not expensive given where interest rates are. They never buy a ton of people. Interest rate didn’t belong to 0. Then very abruptly in a matter of 12 months, he raised interest rates fly over the basis points, destabilize the system. Now they’re talking about cutting rates and that the Fed is too restrictive. There’s no signs that I could tell though that the economy, when the market that the Fed is restrictive, you know, the stock market is near the high. You’re seeing lots of speculation in the market. There’s this stuff with, I’m not involved with this stuff with Trump. The SPAC is an example of the speculation in the market. So I, I see no signs between the economy and performance and the market performance that the Fed is too restrictive. Now, I, I, I expect we’ll get one or two cuts in rates in the short end, but you know, the long end I think is overvalued, which is a real problem because all the valuation models that one looks at as the stock market expenses relative to bonds, I think bonds are overvalued. You know, prior to 2008 in the great financial crisis, the 10 year bond yielded in line with nominal GDP. So if you take inflation at 3 to 4%, not 2, and add to that real growth of 2%, you have nominal GDP growing 5 or 6%. And I don’t think the 10 year bond would be interesting at 5 or 6% to me at least. I’m an equity oriented guy. I find lots of things to do in the market that make more sense than bonds, although you have some bonds. Can you let’s talk about some of your, of your holdings like you’re, you’re not in cash, obviously. Do you have a higher cash component right now given given your your market outlook or are you fully invested? Just on average, I’m pretty heavily about 15% of my family offers assets or in energy about 20%. And something I’ve been very wrong on timing wise. But I think, you know, it falls into the category if something sounds too good to be true, the odds are not true Is Legato first lien bonds, they’re trading around $0.15 and a dollar. It’s a complex story, but at the end of the day, I’ve spoken to seven major law firms. Also the same thing, the government, the government’s behavior here has been disgraceful. You know, seven years ago, the Department of Defense falsely, and I say falsely alleged that through spectrum interference, the only body responsible setting spectrum policy in the country is the FCC. They extend the allegations for five years. After five years, a bipartisan group or five to zero to approve the use of the spectrum. Then all of a sudden the Department of Defense is changing their story. They say we want the spectrum for national security purposes and we’re not going to tell you why. OK, I have no problem with that. I’m a loyal American. You just got to pay for what you want. And, you know, and finally the the company belatedly, in my view, sued the government. They’re suing the government for $40 billion. And in their lawsuit, they say they have evidence that the government lied on those. Not a nice thing. The government basically is using their spectrum without compensation. And the government has made its sale of the company very difficult because of the Turner Amendment, which says that if you do, if you own without a spectrum, you can’t do this with Department of Defense. That stuff should be overturned in the lawsuit. At which point I think the bonds go from 15 to par. Plus you’re getting 1517 head points of pic interest every year. Now it’s a 144 a piece of paper. So you it may be too complicated for your audience. I don’t know. But to me, but to me, it’s a, it’s a giveaway.