Leon Cooperman Talks Valuations and Economy #DeliveringAlpha

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Leon Cooperman Talks Valuations and Economy #DeliveringAlpha

Some of the biggest names on Wall Street gather in New York to express their views on the best investment idea in this market, with CNBC’s Maria Bartiromo. Leon Cooperman, Omega Advisors chairman & CEO delivers a few of his ideas.

Video and transcript below:

biggest names on wall street are gathering in new york today atthe delivering alpha conference. want to go there live where ourown maria bartiromo is leading a panel looking for the best ideas in this market. panel includes lee kuperman, jim chanos, robert capito. want to listen in for just a moment. good morning. i hate to start out by disappointing you, but i’m goingto get to that at the end as opposed to the beginning. to me, asking for my best ideas is like asking which of my children, grandchildren or daughters-in-law i love the most. since i love them all i have to play a little bit by different rules. but i want to set a table. because over the years we’ve learned the expression that the bull markets, who needs analysts, bear markets, who needs stocks? receiving tide lowers all theships. let me tell you the environment i foresee. then i’ll get into what i think makes the most sense. i would call myself moderately, underline the word moderately, constructive about the u.s. market. the answer, why? number one, we do not have a recession in our forecast horizon. typically bear markets precede recessions. secondly, to say — it would be modest to say we have extraordinarily accommodative monetary policy, plus with a more active third, valuations are very reasonable.fourth, in my opinion, investors have derisked and the pain tradeis up. i can’t see my slide. basically i think i say at the end there, a little cloudy, to me stocks are the best house in the financial asset neighborhood. it’s still, however, not clear whether it’s a good neighborhood or bad neighborhood. in terms of specificity, you know, we have to understand, economic expansions tend to persist for a period of time. you look at the middle column. the average economic expansion in the post-war period has been about five years. you know, essentially i think i can come up with more arguments that this economic expansion will be longer than average rather than shorter thanaverage. i don’t want to make the argument at the moment. all i’ll say is we’re about midway through a typical economic expansion. look at the points i’ve enumerated. with so many sectors of the economy operating below potential, one could argue this economic expansion could be longer than average.next point i would make, we have kind of sluggish continuedeconomic growth. i think our s&p earnings are $104. the index about 13 times this year’s earnings if you look at the next 12 months’ earnings going forward the multiple in the market is about 12.5. i’ll put that in perspective in a moment. number one, the economy is okay. not great. i have only seven minutes.maria is going to give me the hook. i don’t want to explain to youthat the growth is too slow to reduce unemployment, thereforewe’re going to continue to be in a very stressful environmentwith a lot of social stress. secondly, monetary policy, the federal reserve board writes a — every other day mr. bernanke tells us he wants higher stock prices, low interest rates over a persistent period of time. it’s not just a u.s. phenomena. look around the world. look at the balance sheet of the ecb. look at the balance sheet of the bank of japan. if you look at the balance sheet of the bank of england. i don’t have the balance sheet for the chinese banks, but they’re now moving the same direction. i think something like 260 easings globally. okay? monetary policy clearly on your side. this is an interesting exhibit. in the 50-year period, 1960 to 2010, the multiple and the s&p average 15 times. current multiple according to 12 month forward earnings about 12.5. when the multi. and average 15 times — 10-year u.s. government bond averaged 6.67. i got to point here. you can see this. all right. that is lee kuperman who’s had a bunch of winners in the last year. giving some of his best ideas. we’re going to hear more from that panel. in fact, brian sullivan is on our delivering alpha desk continues to monitor that panel and will bring us more of the ideas as they are revealed. that’s the delivering alpha conference in nye thai city.

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