WHEN: TODAY, TUESDAY, March 15, 2016
WHERE: "FAST MONEY HALFTIME REPORT"
Following are excerpts from the unofficial transcript of a CNBC interview with Leon Cooperman, Chairman and CEO of Omega Advisors, today on CNBC's "Fast Money Halftime Report." Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000501800, http://video.cnbc.com/gallery/?video=3000501805 and http://video.cnbc.com/gallery/?video=3000501802.
All references must be sourced to CNBC.
Cooperman on Romney and Trump:
Mitt Romney was one of the most qualified people to run for President and he was vilified for his wealth and his success. And now we have Mr. Trump telling everybody they're underestimating his wealth and success yet he's the front runner. So the wealth for Romney worked against him and the wealth for Trump is working for him. So go figure it all out.
Cooperman on the Election Uncertainty:
I think we need more on the fiscal policy side to create more economic growth. We need more on the education side but we'll get through this period. The nation is strong. We'll survive. But I would say the election uncertainty is not a plus for the market.
Cooperman on Fiscal Policy:
The wealthy people are not creating the problems for the less wealthy. We've had stagnant fiscal policy. The entire burden of dealing with this economic recovery has been placed on the shoulders of the Fed. The Fed felt that what they had to do was get the stock market up to create wealth. They got the stock market up by dropping interest rates. As the stock market rose, the vast bulk of the benefit went to a select few whereas if we pursued a program of fiscal policy changes, a repatriation of earnings overseas tied to employment, and encouraged a more pro-business environment, we might have had a more different outcome.
Cooperman on the Conservative Investor:
I think the best news for the investor is the stock market has really not discounted a rosy scenario. If I said to you a year ago short rates would be 25 to 30 basis points, the ten year would be 190, the economy would be growing two, two and a half percent, profits would go up five percent and the market would be hovering around 15 and 15 and a half times earnings, you'd say that multiple seems a little bit low relative to interest rates and inflation. So the investor is taking a very conservative stance and I think that's good because the extent that a conservative set of assumptions is built into the market pricing, that's positive.
Cooperman on Cheap Stocks:
The kind of conditions that lead to an important decline don't seem to be present but I think there are governing factors on the market multiple on the upside which is why I say I have a neutral plus view. My view is 1810 was at all likelihood the low for the year. I think we end the year modestly higher than we began. And I find a ton of stocks that are very cheap because we've had stealth bear market really for about a year and a half. A lot of stocks are down and sell at extremely reasonable valuations.
Cooperman on Microsoft and Google:
Microsoft is a premium to the market multiple. It's about in line with the market multiple next year. It's growing probably twice the market. Fortress balance sheet. Excellent technology. Very much participating in the cloud. It's very good value. As would be Google. Google is probably the highest multiple in our portfolio at 21 times this year's earnings but they're growing over 20 percent a year so next year its down 16 times earnings so for 20 percent growth rate its reasonably attractive.
Cooperman on a Different Market:
I think that we've had a series of regulatory changes which in the aggregate has made this market not the market my father invested in. Dodd Frank, the Volcker rule, the demise of the specialist system. For some unexplainable reason we eliminated the uptick rule. In 1938, to deal with the abuses of the day, the SEC enacted the uptick rule which served us well for like 70 odd years. In July of 2007 it was eliminated which basically aided and abetted the growth of the high frequency trading crowd.
Cooperman on No Depth to the Market:
Brokers, banks they can't carry inventory. And there's no depth to the market. So part of the speed of the selloff in the equity market in February was the high yield market lost a bid. You couldn't move your inventory and a lot of people I know in the high yield game were shorting off S&P's because they couldn't sell their high yield bonds. So there's very limited liquidity and to the extent that liquidity is limited that means risk premiums have to go up and that's a not a healthy thing because if risk premiums go up that means multiples go down, and if multiples go down, the cost of capital to business rises.
Cooperman on Oil:
For Opec, you take their revenues for oil and gas sales, subtract out capital expenditures and social costs instead of dividends, they're running a negative cash flow of something like 500 billion dollars a year. Those are not sustainable numbers. So if the world grows, if we have global economic growth of say three percent, there could be an increase in demand above a 92 million barrels a day that we're consuming and I would expect prices to move up. So in a couple of years time I wouldn't be surprised to see oil 50 to 60 dollars a barrel and I think the current price is not sustainable.
Cooperman on Jamie Dimon:
I absolutely admire, respect and love Jamie Dimon. The man is in a class by himself. He's got to deal with these regulators and they're crazy. We put money into other financials, increased our waiting in a less controversial area. But he's the best.
Cooperman on the Credit Markets:
I think one of the big headwinds for the stock market is what is going on in the credit markets. In May, June of last year, the high yield index was maybe 400 over Treasuries, it got to 950 in February. It's now around 750. Those are very potent numbers. It's very potent competition for equities so keep your eye on the credit markets.
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