Investment icon Leon Cooperman doesn’t see a major tank for the stock market in the near future, but a 10% correction could happen anytime, says the CEO of Omega Advisors.
The S&P 500 hasn’t endured a 10% correction since the plunge during the onset of the pandemic in March 2020. It has almost doubled since hitting a trough March 23, 2020. The index closed at 4,313 Thursday, down 1%.
So what would be necessary to send the market into a major tailspin?
“It’s going to take a recession, a big turn in the Fed, with hostile rising rates, the dollar cratering or some kind of significant geopolitical event to derail the market,” Cooperman told CNBC. “And I don’t think any of those things ... seem to be in the cards.”
GDP soared 6.6% in the second quarter. And only half of Federal Reserve policy makers even believe the central bank will raise rates as soon as next year. Also, the Bloomberg Spot Dollar index hit an almost-11-month high Wednesday.
But for the short term, “the market could drop 10%, 15% at any time,” Cooperman said. “I don’t think it will go much beyond 10%.”
Cooperman said he has a “bearish longer-term view.” His concern includes the $29 trillion government debt, sticky and lofty inflation and low interest rates. The consumer price index surged 5.3% year-on-year in August and 5.4% in July.
Meanwhile, the Fed-controlled federal funds rate remains at zero to 0.25%, and the 10-year Treasury yield stands at 1.53%, down 1 basis point.