Legendary investor Cooperman is betting on the US recession next year: rising inflation may hit US stock valuations hard

In comparison, billionaire investor and Omega Advisors CEO Leon Cooperman warned this week that the US economy could fall into recession within the next year and drag down the stock market. He pointed out that the current market is similar to the collapse of the Pretty 50 in the 70s of the last century, and expressed concern about cooling AI optimism.

In an interview with CNBC, Cooperman said: I think we will experience a recession sometime next year, which may cause the market to fall. At the same time, he believes that the market's expectations for S&P 500 earnings growth are biased (FactSet data shows that this quarter's year-on-year increase is expected to exceed 50%). Currently, he clearly deviates from mainstream Wall Street bullish views. In particular, he avoids technology stocks, and has a negative view of the overall market.

He reminded investors not to underestimate the risk of inflation rebounding. Brent crude oil remained high after the Iran war (about $90 per barrel, more than 20% higher than before the war), and retail sales fell 0.6% month-on-month in July (far lower than the 0.1% increase expected). Higher inflation or a blow to stock valuations is similar to the sharp decline in growth stocks after the rise in oil prices in the 70s. One of the most dangerous words in the field of investment is: “This time is different.” Cooperman said that the current market is almost generally bullish, and once a negative catalyst appears, investors may sell off quickly.

At the same time, fluctuations in the bond market have intensified the pressure. The US 30-year Treasury yield hit 5.33% on Tuesday, the highest since June 2007, and broke through a three-year trading range. Analysts warned that if yields rise rapidly to 6%, the stock market may face further pressure on valuations. Historically, after a similar trend in 1999, the S&P 500 then adjusted and the Internet bubble burst.