Leon Cooperman is back with another warning for investors.
The billionaire investor and former Goldman Sachs CEO laid out a troubling outlook for the US economy and markets this week, predicting the US economy could tip into a recession sometime within the next year.
Speaking to CNBC, the Omega Advisors CEO pointed to several signs in today’s market that parallel past boom-and-bust cycles, such as the Nifty Fifty era in the mid-1900s. The famed hedge-funder said signs are pointing to a coming end to the current economic cycle — and a round of turbulence that could also hit stocks as the hype for AI starts to fizzle out.
“I think that we’re going to have a recession sometime next year, and that will probably bring the market down,” Cooperman said, adding that he believed earnings estimates for the S&P 500 were mispriced.
The benchmark index is on track to post year-over-year earnings growth of over 50% this quarter, the highest pace of earnings growth since the pandemic stock boom, according to the latest update from FactSet.
Cooperman is in the minority on Wall Street, where most forecasters are feeling confident in the enduring demand for AI and have faith that investment in the technology will pay off from ROI perspective. Despite a recent rotation in the AI trade, the Nasdaq 100 is on track for another year of double-digit gains, having climbed 19% from levels in January.
Economic growth, meanwhile, has remained resilient so far this year, with GDP expected to rise by 4.3% in the third quarter, according to the latest estimates from Atlanta Fed economists.
But investors appear to be shrugging off one key threat: hotter inflation, Cooperman said, pointing to the recent increase in oil prices. Brent crude, the international benchmark, traded around $89 a barrel on Monday, still elevated 22% from levels prior to the start of the Iran war.
US consumers are showing signs they’re starting to tighten the purse strings under the weight of elevated inflation. Retail sales dropped 0.6% in the month of July, falling short of the 0.1% expected increase for the month, according to the Commerce Department.
Hotter inflation also poses a risk to stock prices, Cooperman said. He pointed to the rise and fall of the Nifty Fifty stocks, with the group of large-cap growth companies finally starting to crater in the 70s as oil prices surged.
“The three most dangerous words in investment land vocabulary are: ‘It’s different this time,'” he said of the current investment landscape, later adding that he was “negative” on markets overall and avoiding tech stocks in particular.
He also flicked at the possibility that people could dump equities en masse in response to a negative catalyst in the market.
“I find it interesting that everyone is bullish,” Cooperman said. “They sell stocks whenever there’s a negative announcement.
Cooperman has been a notable bear on Wall Street recently, even as other forecasters have doubled-down on the AI trade and lifted their expectations for the S&P 500. Speaking on Fox Business earlier this year, Cooperman flagged similarities between today’s market and past market bubbles, and said he saw a recession hitting the US as soon as late 2026.
