WHEN: Today, Friday, January 15th
WHERE: CNBC's "Fast Money Halftime Report"
Following are excerpts from the unofficial transcript of a CNBC interview with Omega Advisors Founder Leon Cooperman on CNBC's "Fast Money Halftime Report" (M-F, 12PM-1PM ET) today. Following are links to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000481163 and http://video.cnbc.com/gallery/?video=3000480913.
All references must be sourced to CNBC.
COOPERMAN ON LARRY FINK
IN THE INVESTMENT GRADE INDEX, IN MAY OF LAST YEAR, MAY 12THTO BE PRECISE, WAS 127 BASIS POINTS OVER TREASURIES. IT'S NOW BASICALLY 179 BASIS POINTS. SO THE INVESTMENT GRADE MARKET HAS DETERIORATED. SO THESE CHANGES IN RATES HAVE, YOU KNOW, A PRONOUNCED IMPACT ON HOW ONE VALUES THE MARKET. AND SO I THINK THIS IS AFFECTING LARRY'S THINKING. I THINK HE IS A LITTLE BIT TOO PESSIMISTIC, BUT WEL'L HAVE TO WAIT AND SEE.
COOPERMAN ON THE MARKET THAT NO LONGER EXISTS
PART OF ME SAYS THAT THE MARKET THAT I HAVE GROWN UP WITH NO LONGER EXISTS. THAT DODD-FRANK AND THE VOLCKER RULE HAS PROHIBITED THE BROKERS FROM COUNTING INVENTORY. THE COMMISSION STRUCTURE PROVIDES NO REWARD FOR BROKERS TO TAKE RISK. THE SPECIALIST SYSTEM HAS BEEN DESTROYED. AND I THINK THE S.E.C. MADE A VERY BIG MISTAKE IN 1900 – IN 2007. JULY TO BE PRECISE, IN 1938 THEY ENACTED THE UPTICK RULE TO DEAL WITH THE ABUSES OF THE DAY. AND THAT WORKED WELL FOR, YOU KNOW, 70 ODD YEARS. AND THEN IN JULY OF 2007 THEY ELIMINATED THE UPTICK RULE, WHICH I THINK GAVE RISE OR AIDED AND ABETTED ALL THESE QUANTITATIVE TRADING STRATEGIES AND SYSTEMS THAT ARE LARGELY MOMENTUM BASED AND NOT FUNDAMENTAL BASED.
COOPERMAN ON RECESSION
I THINK IF WE DON'T HAVE RECESSION, WHICH IS MY BET, BASICALLY, AND SHAPES MY VIEW, IS THAT THE AVERAGE COMMON STOCK IN 2016 WILL PERFORM BETTER AND CATCH UP TO FANG. AND IF THE MARKET IS FORECASTING RECESSION AND IT IS NOT A STRUCTURAL ISSUE, BASICALLY, THEN I THINK FANG DROPS TO CATCH UP TO THE AVERAGE COMMON STOCK.
COOPERMAN ON ENVIRONMENT
I DON'T BELIEVE THIS ENVIRONMENT MERITS ONE BEING ON MARGIN. I DON'T THINK THIS ENVIRONMENT, YOU KNOW, CALLS FOR HEROICISM, YOU KNOW, HEROIC ACTIONS. SO I'M THERE. I GUESS WHAT I WOULD SAY TO YOU IS I'M NOT SELLING. I'M HOLDING ON BECAUSE I DO BELIEVE IT'S A GROWTH SCARE RATHER THAN A BEAR MARKET. THAT IS THE JUDGMENT I'M MAKING. AND SO WHAT I CAME INTO YOU I SAID, YOU KNOW, 15 TO 17 TIMES EARNINGS, 1850 LOW. 2,200 HIGH. ABOUT TWO WEEKS AGO, I KIND OF REACHED A CONCLUSION MAYBE I OUGHT TO THINK IN TERMS OF 14 TO 17 MULTIPLE.
COOPERMAN ON CONSUMERS
LOOK AT RETAIL SALES AND OVERALL ECONOMIC ACTIVITY, I THINK IT'S A SOFT PATCH RATHER THAN RECESSION. COSTCO, IF YOU TAKE OUT FOREIGN EXCHANGE AND GAS DEFLATION, THERE SAME STORE SALES IN DECEMBER WERE UP 5%. JC PENNEY, WHICH IS MORE APPARREL ORIENTED, SAME STORE SALES WERE UP 4%. SO YOU KNOW, OVERALL I THINK, YOU KNOW, RETAIL SALES ARE OKAY AND THE CONSUMER IS IN A GOOD POSITION.
COOPERMAN ON THE FED
THE FED RAISING RATES AND I ASSUME THEY WILL RAISE RATES IF THE ECONOMY CONTINUES TO MOVE AHEAD. IT IS INDICATIVE OF AN IMPROVING ECONOMY, RISING EARNINGS, RISING DIVIDENDS, AND A POSITIVE ECONOMIC ENVIRONMENT. SO THE STOCK MARKET IS ALREADY DISCOUNTING HIGHER RATES. I THINK THE STOCK MARKET DISCOUNTING SOME COMBINATION OF SLOWER SECULAR ECONOMIC GROWTH OR HIGHER INTEREST RATES. BUT THE FACT IS DISCOUNTING IT IS CONSTRUCTIVE.
COOPERMAN ON CHINA
I'M MORE WORRIED ABOUT WHAT'S GOING ON IN OUR CREDIT MARKETS. THAT TO ME WOULD BE MORE SIGNIFICANT. CHINA'S AFFECT ON OUR GDP IS NOT SIGNIFICANT. NOW, CHINA'S AFFECT ON COMMODITY PRICES WAS QUITE DRAMATIC. BUT THOSE STOCKS HAVE BEEN DESTROYED. OIL AND METALS, ETC. HAVE ALL BEEN DESTROYED. SO, I'M NOT AN EXPERT ON CHINA. BUT I WOULD EXPECT THAT THAT IS NOT AS BIG A PROBLEM DOMESTICALLY AS IS BEING MADE OUT TO BE.
COOPERMAN ON THE CREDIT MARKET
THERE IS NO LIQUIDITY IN THE CREDIT MARKET IN THE HIGH YIELD AREA. THEY CAN'T SELL THEIR PAPERS, SO WHAT THEY ARE DOING IS THEY ARE CROSS-HEDGING AND SHORTING S&Ps. AND THE S&P WILL JUST HAVE TO FIND A LEVEL THAT IT IS COMFORTABLE AT. I WOULD HAVE THOUGHT THAT THAT LEVEL IS NOT FAR FROM WHERE WE ARE PRESENTLY. AND LARRY IS ALLOWING FOR ANOTHER 10% DROP. I DON'T THINK WE'LL GO DOWN ANOTHER 10%, BUT I WOULDN'T SAY IT'S IMPOSSIBLE.
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