Leon Cooperman: Negative interest rates are destructive to the system

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Leon Cooperman: Negative interest rates are destructive to the system
Image source: CNBC Video Screenshot

Leon Cooperman, Omega Advisors chairman and CEO, joins “Fast Money Halftime Report” to discuss negative interest rates, the Fed, and his best trading ideas.

H/T Dataroma

Leon Cooperman: Interest rates are not the economy’s issue

Star hedge fund macro trader Colin Lancaster warns: Inflation is back

InvestorsTalk of inflation has been swirling for some time amid all the stimulus that's been pouring into the market and the soaring debt levels in the U.S. The Federal Reserve has said that any inflation that does occur will be temporary, but one hedge fund macro trader says there are plenty of reasons not to Read More


Transcript

Japan has had negative interest rates for three and a half years what it has done nothing. Europe has negative interest rates, what’s going on their economy doing very poorly. The president the vice president side, a bunch of factors, some of which, on my list, consumer conferences up retail sales, a strong employment a strong consumer net worth is near record levels. economy is growing at trend, corporate profits, a decent corporate America, if they were pessimistic, they wouldn’t be buying back. Well, the stock they’re buying. So corporate America, sentiment is good. Rates are already low. I pity the poor guy or gal that’s worked entire lifetime. When they go to their financial planner and ask for some advice about retirement. How can we afford to retire? There’s no income. Okay.

Good luck being a saver.

And we have a budget deficit is going up when you come is fully employed. You know, it doesn’t fit with interest rates being cut, interest rates are already low. That’s not your problem. I’ve said this on the programme before but you know, last 50 years, the multiple the market was 15. Okay, it’s currently 16 and a half when the market multiple was 15, the 10 year government six two, it’s currently one eight, and the Fed Funds was five currently too. So I don’t understand investors fixation and need for rates to go down. negative interest rates are destructive to the system, destructive this system.

All that said, I mean, the Fed is cutting rates we know regardless…

Fed is cutting rates because they’re being a prisoner to the stock market. The stock market is dictating Fed policy that I think is a mistake. We’re all this is building up for some problems down the road. The markets Okay, now, we discussed this numerous times. bull markets are born of pessimism, they grow and scepticism they mature in optimism, they die in euphoria other than the IPO market I don’t see much euphoria in the market.

We are inflating a massive bubble that is one day going to burst because of I was that policy that you say is not necessary?

Yeah, I would say that worries look, I think the markets Okay. Now what are the previous speakers said I was given type parabola. When I say they wouldn’t open the market if Elizabeth Warren, my way of just saying the market would be very vulnerable. The market is not focused on a change of leadership, particularly as somebody like Elizabeth Warren, given what she advocates, okay, I’m not. I think America has been great. I think the performance the economy has been terrific. I think all this dissatisfaction with capitalism is misplaced. You know, I love to quote Winston Churchill, very articulate man, so you don’t make poor people rich by making rich people poor. He also said the main vice of capitalism is the uneven distribution of prosperity. The main vice of socialism is the equal distribution of misery. All this talk about free stuff is destructive.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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