We are facing a 22% slump, says legendary billionaire Leon Cooperman

Many still believe that the majority opinion is wrong and big growth can still come. But that's certainly not what one of Wall STreet's most prominent investors and billionaires thinks.

Billionaire and investor Leon Cooperman thinks the S&P 500 index will drop 22% from here on out , while predicting that it will drag the U.S. economy into a recession.

"I think Fed tightening, high oil prices, or maybe a strong dollar - some combination of those four things will create a recession and the ultimate bottom of the market will be about 35% below the 4,800 peak," the chairman and CEO of Omega Advisors elaborated .

The billionaire warns that the benchmark stock index could fall as low as 3,100 points.
Cooperman predicts stubborn inflation and further interest rate hikes and worries about the national debt. Leon Cooperman predicted that the S&P 500 index will fall about 22% before reaching its bottom, and warned that the resilient US economy will eventually slip into recession.

"I predict it will all end in a recession," the billionaire said in a recent interview.

Cooperman's reference to tightening refers to the Federal Reserve shrinking its balance sheet (quantitative tightening) in order to reduce the US money supply. The U.S. Federal Reserve stocked up on bonds during the pandemic to supply liquidity to the economy and promote growth (quantitative easing or QE).

Higher rates incentivise saving at the expense of spending, investment and hiring, and this means they can slow the rate of price growth. But they can also reduce demand, which depresses asset prices and increases the risk of recession.

Cooperman's comments show that he expects the declining money supply, higher rates and other factors to knock the S&P 500 Index down to around 3,100 points, more than a third below the benchmark index's peak of 4,800 points in January 2022.

Still, the billionaire and former head of Goldman Sachs' asset management division noted that the market downturn could bring great deals for bargain hunters. And I agree with that, too.

"I'm not a bull or a bear. I just like and find a lot of cheap stocks," he said.

"Inflation-adjusted rates are still negative - you have to get into positive territory before you stop the economy," he said. "I expect higher rates, continued high inflation and probably, unfortunately, higher taxes."

Cooperman additionally sounded the alarm about - in his words - the shocking size of the national debt, pointing out that it has ballooned from $20 trillion in 2017 to more than $31 trillion today.

https://www.youtube.com/watch?v=U3XTzSqIpqA

Disclaimer: This is in no way an investment recommendation. It is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.