Financial expert Leon Cooperman, heading the Omega Family Office, has issued a cautionary statement via Yahoo Finance about the direction of America’s financial health under President Joe Biden’s leadership.
Cooperman is of the opinion that the United States is on a trajectory towards a recession by 2024, with the stock market possibly teetering on the edge of a downturn.
“The majority of the market is on a downward trend,” Cooperman expressed, acknowledging a slight increase in earnings. He pointed out, however, that excluding a group he dubbed the ‘Sainted Seven’, a reference to seven high-flying stocks including Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla, the broader market has experienced declines.
He observed that despite some companies’ solid performance, they aren’t seeing their stock prices reflect this, which he attributes to overarching economic pressures.
He pinpoints the looming recession to a combination of factors such as stringent monetary policy, the escalating cost of oil, a robust U.S. dollar, and Federal Reserve policies. The anticipated result is a dip in stock values accompanied by increased market instability.
Historically, there’s been a noticeable drop in the S&P 500, with declines in August and September of 1.77% and 4.87% respectively.
For Cooperman, the national deficit is a significant source of concern.
“Inflation concerns me less than the nation’s fiscal health,” he remarked. He criticized the current fiscal strategies as excessively ambitious, essentially borrowing against the nation’s future without regard to the country’s financial capabilities.
He also noted that the growing $33.68 trillion national debt is not only a result of Biden’s fiscal policies but can also be traced back to the tenure of former President Donald Trump.
Cooperman recalled Trump’s fiscal approach, which led to a trillion-dollar deficit even during a period of full employment. He believes that under Biden, the situation has deteriorated further due to the existing economic challenges and the strain of managing two wars.
He also alluded to the tough choices Biden faces between allocating funds for national defense or domestic programs, a decision Cooperman believes will fuel inflation and create a challenging environment for the stock market.
According to the U.S. Treasury’s report up to September 30, 2023, the deficit has surged to a staggering $1.7 trillion, marking the highest since the COVID-19 pandemic, with a 23% increase from the previous year. The deficit’s growth has been attributed to reduced tax revenues alongside increased expenditures on Social Security, Medicare, and notably higher interest payments on the federal debt.
Compounding these concerns is Biden’s proposal to Congress seeking an additional $100 billion for international aid and security commitments, which includes substantial financial support for Ukraine and Israel.
Cooperman warns that these conflicts are likely to have a detrimental effect on the country’s fiscal policies.
He also suggested that President Biden does not seem inclined to address these trillion-dollar fiscal deficits.
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