In the few days following the US election cut off date, stock markets hovered in an indecisive way, following the ups and downs of the counted votes. One minute it looked like Biden was winning, then trump, then Biden, until finally we knew it was definitely Biden who won. And that is when the world’s stock markets broke out of a stranglehold and shot upwards, with Japan’s stock market hitting its highest level in almost three decades. It wasn’t the only one: the FTSE 100 also saw a surge on Monday after the president-elect was declared on Saturday.
Billionaire hedge fund manager, Leon Cooperman, spoke to Jonathan Ponciano at Forbes. Cooperman is a Biden voter, and while he is not particularly bullish about the long-term health of the US economy, he believes the short-term will be favourable for stocks. He says that this will be the case, even if the results are challenged, which is already an ongoing battle.
Cooperman also suggests that with Biden in the White House and Congress split, as well as the Federal Reserve keeping interest rates low, are all positive points, especially when combined with the prospect of a vaccine to tackle the pandemic, and another stimulus bill becoming law.
On Wall Street in the long term he is decidedly more bearish. He points to the US government’s debt of $27 trillion, up nearly five times on 20 years ago. It more than doubled in the last decade due to coronavirus spending and Trump’s tax cuts.
It is interesting that Cooperman is still pursuing growth stocks. For example, Alphabet, Google’s parent company, Amazon, Microsoft and Facebook are in his portfolio. His view on these is, as he told Ponciano. he’s not buying, “but not selling, either,” and called them “better than gold.” He also offers some tips on less expensive stocks, citing Cigna, one of his favorites, Navient, Spectrum and General Motors as “having good stories.”
His main complaint is that there is too much debt in the system: ”There’s a long-term consequence to what’s going on; there’s just too much debt in the system. . . . I’m assuming in the next 12 to 18 months something will happen that changes this Goldilocks environment, and it will force the hand of the Fed.”
Cooperman emphasized looking at how many investors are now back to eyeing the prospects of additional fiscal stimulus, vaccine development, as well as any decision by the Federal Reserve to raise interest rates once again, as being the things to watch.