Cooperman Sees Disaster When The Fed Party Stops

(Business Insider) The billionaire investor Leon Cooperman thinks the stock market is overvalued as investors overlook several key risks, including the growing national debt, he told CNN on Monday.

"I think the market is ahead of the fundamentals," Cooperman said. "And I believe in economic recovery, and I believe we'll get ahead of the virus problem, but I think that the valuations are just too high relative to the uncertainties."

US stocks have rebounded strongly since the pandemic-related meltdown in March and are nearing all-time highs even as the crisis continues. Still, Cooperman sees investors overlooking risks that could weigh on markets, including "the China relationship deteriorating, the tremendous increase in debt in the system, certainly from the election, the virus issues."

He said he was particularly worried about the national debt, which has surged as the government has attempted to rescue the US economy from the shock of the coronavirus pandemic.

"I am focused on something the market is not focusing on at the present time, and that is: Who pays for the party when the party is over?" Cooperman said.

In addition, he said, he worries that the federal deficit is growing much faster than the US economy, meaning that "more of our nation's income will have to be devoted to debt service, which will retard economic growth in the long term."

Cooperman — who last year publicly fought with Sen. Elizabeth Warren, then a Democratic presidential candidate, over her wealth-tax proposal — said he also worried about a Democratic sweep in the November election.

"If Democrats control Congress and the White House, I think that there's going to be a big increase in taxation, which will not be a positive for the market," he said.

He also described President Donald Trump as "worse than I feared in many respects."


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