WHEN: Today, Thursday, December 7
WHERE: CNBC's "Fast Money Halftime Report"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Omega Advisors Chairman And CEO Leon Cooperman and CNBC's Scott Wapner today at the Wells Fargo Investment Thought Leadership Forum. The interview aired Thursday, December 7 on CNBC's "Fast Money Halftime Report" (M-F 12:00PM – 1:00PM.) Following is a link to video from the interview on CNBC.com: https://www.cnbc.com/video/2017/12/07/billionaire-investor-leon-cooperman-i-have-no-money-in-bitcoin.html and https://www.cnbc.com/video/2017/12/07/billionaire-investor-leon-cooperman-if-hillary-clinton-won-wed-be-in-a-recession-today.html..
All references must be sourced to CNBC.
SCOTT WAPNER: ALL RIGHT, GUYS, THANK YOU VERY MUCH. WELCOME TO "THE HALFTIME REPORT." I'M SCOTT WAPNER. WE ARE LIVE IN NEW YORK CITY FROM THE WELLS FARGO INVESTMENT THOUGHT LEADERSHIP FORUM. AND WE ARE JOINED TODAY BY SEVERAL SPECIAL GUESTS THROUGHOUT THIS HOUR. OUR FIRST IS HEDGE FUND LEGEND, LEON COOPERMAN, OF OMEGA ADVISORS. OUR OWN JIM LAVENTHAL IS HERE WITH US WELL. IT'S GREAT TO HAVE LEE WITH US. JIM, GOOD TO HAVE YOU HERE AS WELL.
JIM LAVENTHAL: THANKS SCOTT. THANKS LEE FOR JOINING US.
WAPNER: LEE, LET'S CATCH UP WITH YOU ON WHERE YOU THINK WE ARE NOW IN THE MARKET. FROM YOUR LAST APPEARANCE, NOT THAT LONG AGO, WE CONTINUE TO MOVE HIGHER. THERE'S CONSIDERABLE TALK ABOUT WHAT THE IMPACT OF TAX REFORM IS GOING TO BE ON THE STOCK MARKET. IF WE WERE FAIRLY VALUED FOR THE LAST COUPLE OF TIMES, FEW TIMES YOU'VE BEEN ON THE NETWORK, WHERE ARE WE TODAY WITH THE DOW NORTH OF 24,000?
LEON COOPERMAN: WELL, YOU KNOW, FAIR VALUE RISES BECAUSE THE MARKET HAS A CAPITAL MARKET LINE AND PROBABLY GOES UP 6% A YEAR. I WOULD SAY I VIEW THE MARKET AS REASONABLY FULLY VALUED. I DON'T THINK IT'S OVERVALUED.
WAPNER: YOU DON'T THINK IT'S OVERVALUED YET?
COOPERMAN: NO. I DON'T THINK IT'S OVERVALUED. THE REAL QUESTION IS WHAT ARE YOU DISCOUNTING THE EARNINGS WITH? THE TEN YEAR GOVERNMENT IS 2.3%, THE FED FUNDS RATE IS 1%. THOSE ARE VERY, VERY UNCOMPETITIVE INTEREST RATE LEVELS FOR THE STOCK MARKET. AND SO IF RATES STAY DOWN HERE, I THINK THE MARKET IS OKAY. WHAT I WOULD SAY IS I THINK THE MARKET IS REASONABLY FULLY VALUED WITH THE CONDITIONS THAT WOULD LEAD TO A BIG DECLINE DON'T SEEM TO BE PRESENT. AS I'VE OFTEN SAID ON THE PROGRAM, THE CONDITIONS ARE, NUMBER ONE, THE MARKET SMELLING AN ONGOING RECESSION. IF ANYTHING, THE ECONOMY IS GAINING A LITTLE BIT OF MOMENTUM, NOT DECLINING MOMENTUM. SECONDLY WOULD BE A HOSTILE FED. IF ANYTHING, I THINK THE FED HAS BEEN TOO SLOW ADJUSTING POLICY. THEY'RE FAR FROM HOSTILE. THIRD WOULD BE EUPHORIC VALUATIONS. AND I DON'T SEE EUPHORIC VALUATIONS. AND FOURTH WOULD BE SOME UNFORESEEN GEOPOLITICAL EVENT WHICH I CAN'T FORECAST.
WAPNER: SO, WHAT ABOUT THIS ROTATION THAT WE'VE BEEN WITNESSING IN THE MARKET, PARTICULARLY OVER THE LAST SEVERAL DAYS?
COOPERMAN: HEALTHY. HEALTHY.
WAPNER: YOU DON'T THINK IT'S A SIGN OF SOMETHING BIGGER? THIS MOVE OUT OF THESE HIGH GROWTH, HIGH FLYING TECHNOLOGY STOCKS INTO OTHER AREAS OF THE MARKET?
COOPERMAN: THEY'RE MOVING OTHER THINGS THAT WERE UP 30, 40, 50% TO GO INTO THINGS THAT HAVE NOT DONE ANYTHING, WHERE COMPANIES ARE DOING REASONABLY WELL. I DON'T SEE WHERE THAT'S UNHEALTHY. THE BROADER THE MARKET, THE BETTER OFF WE ARE.
WAPNER: IS IT MORE LASTING, DO YOU THINK? IS THAT TREND RESETTING ITSELF IN A DIFFERENT WAY?
COOPERMAN: I WOULD EXPECT – OUTPERFORM GROWTH AS LONG AS WE REMAIN AN EXPANDING ECONOMY. BUT WE DON'T LOOK AT THE WORLD THAT WAY, TO BE HONEST WITH YOU. WE LOOK AT THE WORLD ONE STOCK AT A TIME, BOTTOM UP. AND WE'RE FINDING – AS MUCH AS I FIND THE S&P TO BE NOT EXCITING, YOU KNOW, FULLY VALUED, I'M FINDING A LOT OF INDIVIDUAL STOCKS THAT SEEM TO BE VERY ATTRACTIVE RELATIVE TO THE S&P.
WAPNER: NOW, WE HAD CARL ICAHN ON LAST WEEK, WHO SAID YOU KNOW, MAYBE IT SMELLS A LITTLE LIKE EUPHORIA. WE DISCUSSED HIS FIRST ACTIVIST CAMPAIGN OF THE ENTIRE YEAR AND THE FACT, AT LEAST HE SAID, WAS SOMEWHAT REPRESENTATIVE OF IT IS MORE DIFFICULT TO FIND VALUE IN THE MARKET, GIVEN THE GAINS THAT WE'VE HAD. YOU'RE DIFFERENT KINDS OF INVESTORS – BUT
COOPERMAN: NO, NO, NO, NO. HE'S—
WAPNER: -- HOW ABOUT THE NOTION. VALUE IS HARDER TO FIND, IS IT NOT?
WAPNER: OF COURSE. BY DEFINITION THE MARKET IS UP YOU KNOW, FROM 700 IN THE S&P TO 2600. BUT LET ME JUST SAY, CARL IS ABSOLUTELY BRILLIANT. I HAVE A WORLD OF RESPECT FOR HIM. I THINK HE CLOSED DOWN HIS FUND THE END OF 2008, BECAUSE HE SAW LIMITED OPPORTUNITIES AND HE DIDN'T WANT THE RESPONSIBILITY OF RUNNING OTHER PEOPLE'S MONEY. WE'VE BASICALLY HAD A SEVEN OR EIGHT-YEAR BULL RUN, ONE OF THE LONGEST IN HISTORY. SO CLEARLY THE CONSERVATISM HE EXPRESSED IN 08 WAS WRONG. OK. HE HAD A VERY NEGATIVE VIEW OF HIGH YIELD A YEAR AGO. A VERY INCORRECT VIEW. HE'S BRILLIANT. HE'S BRILLIANT. I LOVE WHEN YOU GET ON WITH HIM AND YOU WANT HIM TO TALK ABOUT WHAT YOU WANT TO TALK ABOUT AND HE SAYS NO, I WANT TO TALK ABOUT WHAT I WANT TO TALK ABOUT. THE GUY IS A MASTER. WE FIND THINGS TO DO. AND AGAIN, I'LL GO BACK TO WHAT I SAID A MOMENT AGO, IF YOU HAVE NO RECESSION AND THE ECONOMY IS GROWING AND PROFITS ARE GROWING AND THE FED IS MOVING GRADUALLY TOWARDS A TIGHTENING REGIME, WE JUST FIND THINGS TO DO.
WAPNER: SO, LET ME ASK YOU THIS, EARLIER THIS MORNING LARRY FINK ON THE STAGE IN WHICH YOU SAT JUST A SHORT TIME AGO.
COOPERMAN: A LITTLE AFTER HIM.
WAPNER: SAID WE HAVE NEVER BEEN IN THE SORT OF ENVIRONMENT WERE ABOUT TO EMBARK ON WHERE THE FED IS AGGRESSIVELY TIGHTENING, WHILE AT THE SAME TIME ROLLING OFF THE BALANCE SHEET, WHILE AT THE SAME TIME INTRODUCING A LARGE AMOUNT OF FISCAL STIMULUS, AND HE DOESN'T KNOW WHAT THE IMPACT OF ALL THAT IS GOING TO BE.
COOPERMAN: NEITHER DO I. I MEAN, IF YOU ASK ME ABOUT MY MARKET VIEW, I CAN SAY I CAN SEE AMARKET NEXT YEAR UP 10% TO DOWN 15%, WHICH STRIKES ME AS YOU DON'T WANT TO BE ON THE SAME SIDE OF THE BOAT WITH EVERYBODY ELSE, AT THE BEGINNING OF 2017, YOU KNOW, BLOOMBERG PUTS AN EXHIBIT ON THEIR TERMINAL OF THE LEADING STRATEGISTS AND WHAT THE FORECAST IS. THE AVERAGE EXPECTATION FOR THE S&P 500 THIS YEAR WAS 2,350. HERE WE'RE NOW 2,625 WHEREVER WE ARE AND EVERYBODY IS STILL BULLISH, AND NOW WE'RE LOOKING FOR 2,800. BECAUSE NOBODY HAS A DOWN MARKET. NOBODY HAD A DOWN MARKET IN 2008. A LOT OF THINGS GOING ON. YOU JUST MENTIONED, A LOT OF THINGS GOING ON. I THINK THE TAX PACKAGE MAKES LONG-TERM SENSE. SHORT TERM, I THINK IT'S DANGEROUS. WE HAVE A REASONABLY RAPIDLY GROWING ECONOMY, AND WE HAVE TIGHTENING BY THE FED, WE HAVE BALANCING BY THE FED. I DON'T KNOW THAT WE NEED AN ADDITIONAL FISCAL STIMULUS INJECTED INTO THE ECONOMY.
WAPNER: BY DANGEROUS, WHAT DO YOU MEAN? WHAT COULD BE THE FALL OUT OF IT?
COOPERMAN: WELL, YOU COULD SEE A RAPID ESCALATION IN INFLATION AND INTEREST RATES, WHICH THE MARKET IS NOT PREPARED FOR.
WAPNER: DO YOU THINK THE FED COULD BE FORCED TO TIGHTEN RATES FASTER THAN THE MARKET THINKS?
COOPERMAN: THAT'S A RISK. THERE'S A LOT OF RISKS. THERE'S A NORTH KOREA RISK. THERE'S A RISK THAT THAT THE FED BECOMES LESS HOSPITABLE. I THINK WHAT I SAID ON YOUR PROGRAM A YEAR AGO IS I THINK WE'RE HEADING TO NORMALIZATION. AND WHAT I MEAN BY THAT IS WE'VE BEEN IN A VERY ABNORMAL ENVIRONMENT THE LAST SEVEN OR EIGHT YEARS. EVEN TODAY, $11 TRILLION OF SOVEREIGN DEBT HAS A NEGATIVE INTEREST RATE. A YEAR AGO IF YOU BOUGHT A HOME IN DENMARK, YOU GOT A CHECK EVERY MONTH FOR TAKING OUT A MORTGAGE WITH A NEGATIVE INTEREST RATE. KIND OF CRAZY, RIGHT? DOESN'T MAKE ANY SENSE. SO WE'RE HEADING TOWARD NORMALIZATION. NORMALIZATION TO ME IS A HALF OF ONE PERCENT GROWTH IN THE LABOR FORCE, ONE HALF PERCENT GROWTH IN PRODUCTIVITY. THAT DEFINES REAL GROWTH, THAT 2%. ADD ON ANOTHER 2% FOR INFLATION, THAT'S 4%. IN A 4% NOMINALLY GROWING WORLD, I THINK THE FED FUNDS RATE OUGHT TO BE 2% OR MORE AND THE TEN-YEAR GOVERNMENT OUGHT TO BE 4%. IT'S GONNA TAKE THE FED FUNDS RATE LESS THAN A YEAR TO GET TO 4% -- TO 2%, EXCUSE ME, AND IT'S GONNA TAKE ABOUT TWO, TWO AND A HALF YEARS TO GET TO 4% IN THE TEN-YEAR GOVERNMENT. IN THAT WORLD THE MARKET MULTIPLE SHOULD BE 17. THAT'S MY OPINION, I KNOW PEOPLE COULD ARGUE MORE OR LESS. 17 TIMES 150, WHICH IS POST TAX PACKAGE EARNINGS, YOU'RE 25.50 OR 26.25. WE'RE FAIR VALUED. KEEP IN MIND, MARKETS DON'T PEAK AT FAIR VALUATION, THEY PEAK AT OVERVALUATION. SO I CAN SEE WE'D GO UP 10%, AT WHICH POINT WE'D BE OVERVALUED.
WAPNER: YEP. JIM.
LAVENTHAL: WELL, LEE, THANKS FOR JOINING US. AND I FEEL A LITTLE KINDRED SPIRIT WITH YOU BECAUSE I'M A VALUE INVESTOR. AND LOOK, LET'S FACE IT, THE LAST TEN YEARS HAVE NOT BEEN KIND TO VALUE VERSUS GROWTH INVESTORS. IT'S BEEN ABOUT AN ANNUAL 1.5% OUTPERFORMANCE. DOES VALUE NEED TO BE REDEFINED? BECAUSE IF YOU LOOK AT THE RUSSELL 1000 VALUE, THEIR MAIN METRIC IS PRICE TO BOOK. AND IF YOU JUST GO ON PRICE TO BOOK, YOU GET INTO SOME CRUMMY AREAS. SOME REAL VALUE TRAPS.
COOPERMAN: THE BOOK VALUE IS – THE BOOK VALUE IS – THE VALUE OF A BOOK IS A FUNCTION OF THE RETURN ON BOOK. IF RETURN ON BOOK IS RISING, IT SHOULD THEORETICALLY PAY A HIGHER MULTIPLE, SO YOU HAVE TO LOOK AT THE LEVERAGE THAT COMPANIES ARE EMPLOYING.
LAVENTHAL: AND YOU HAVE TO LOOK AT GOOD WILL AS WELL, AS SOMETIMES BOOK VALUE IS OVERSTATED.
COOPERMAN: I DON'T REALLY PLAY THAT GAME. MY LARGEST POSITION HAS BEEN GOOGLE. GOOGLE IS GROWTH BUT IT'S NOT OVERVALUED. IT'S 20 TIMES ESTIMATED EARNINGS WITH A FORTRESSED BALANCE SHEET AND GROWING ITS MARKET SHARE. FACEBOOK IS A LARGE POSITION FOR ME. IT'S 17 TIMES EARNINGS, GROWING MUCH MORE THAN 17%. SO I THINK YOU'VE GOT TO LOOK AT THESE THINGS INDIVIDUALLY. AND I DON'T BELIEVE -- A CERTAIN PART OF THE MARKET IS EFFICIENT, BUT WHAT KEEPS ME COMING BACK – I OWNED 5 MILLION SHARES OF TIME INC. ON NOVEMBER 9th OF THIS YEAR, TIME INC. STOCK SOLD AT $10. THREE – LESS THAN THREE WEEKS LATER, MEREDEITH BOUGHT IT AT $18.5 IN CASH. IF SOMEBODY WANTED TO TELL ME, TIME WAS EFFICIENTLY PRICED AT 10, NO. THAT'S WHAT KEEPS ME COMING BACK AND PLAYING THE GAME. TO ME –
WAPNER: THAT'S – I KNOW YOU'RE A LITTLE BIT OF A GOLFER. THAT'S THE EQUIVALENT OF HITTING ONE RIGHT DOWN THE MIDDLE. IT MAKES YOU WANT TO COME BACK NEXT TIME.
COOPERMAN: EXACTLY. AND I WOULD SAY, YOU KNOW, WHAT I CONSIDER VALUE COULD BE A GROWTH STOCK THAT IS A VALUE STOCK.
LAVENTHAL: WELL, LET'S TAKE YOUR DEFINITION, GOOGLE BEING A GREAT EXAMPLE BECAUSE THE GROWTH RATE VERSUS THE PRICE OF EARNINGS MULTIPLE MAKES IT VERY TASTY FOR A VALUE INVESTOR.
COOPERMAN: THAT'S THE METRIC I LOOK AT.
LAVENTHAL: PRICE EARNINGS TO GROWTH.
COOPERMAN: PRICE EARNINGS TO GROWTH.
LAVENTHAL: IF YOU LOOK GOING INTO 2018, I THINK I HEARD YOU SAY VALUE SHOULD OUTPERFORM GROWTH THIS YEAR. CAN YOU TELL US WHY?
COOPERMAN: WHAT I SAY IS WHAT I MIGHT CONSIDER A VALUE STOCK, SOMEBODY ELSE MIGHT CONSIDER A GROWTH STOCK.
LAVENTHAL: WELL LET'S USE YOUR DEFINITION. I LIKE YOUR DEFINITION.
WAPNER: GOOGLE IS A PERFECT EXAMPLE, ALL RIGHT. YOU LOOK AT IT AS A VALUE STOCK. IT IS A GROWTH STOCK IN TERMS OF THE BASKET THAT IT'S IN WITHIN THE NASDAQ THE WAY PEOPLE TALK ABOUT IT. BUT YOU AS HAVING LARGE POSITIONS IN BOTH GOOGLE AND FACEBOOK, AND GOING BACK TO THE ROTATION QUESTION, AREN'T RETHINKING IN ANY WAY THOSE POSITIONS, IF YOU THINK THERE'S GOING TO BE A MORE MEANINGFUL ROTATION OUT OF SOME OF THOSE AREAS INTO MORE UNDERVALUED OR OUT OF FAVORED PLACES HEADING INTO THE NEW YEAR?
COOPERMAN: YEAH, I WOULD SAY THAT THINK THAT -- LOOK, I THINK I SAID THIS ON THE LAST PROGRAM AND PEOPLE LAUGHED ABOUT IT. BUT IF EVERY STOCK YOU OWN IS ON A NEW HIGH LIST, YOU'RE A MOMENTUM PLAYER. IF YOU'RE ON THE NEW LOW LIST, YOU'RE OUT OF BUSINESS. SO I AM LOOKING FOR A COMBINATION OF THINGS THAT ARE WORKING AND THINGS THAT ARE OUT OF FAVOR. WHAT I WOULD RECOMMEND ON THE PROGRAM TODAY IS NOT WHAT'S WORKING WITH ONE EXCEPTION. I WOULD WORK WITH OUT OF FAVOR. SO AMC NETWORKS, BASICALLY 7.5 TIMES EARNINGS. SO LET ME GIVE YOU AN EXAMPLE, THE DOLAN FAMILY EARNS 17% OF THE ECONOMIC VALUE OF THE COMPANY. EVERY QUARTER, SIGNIFICANT BUYBACK OF STOCK. EVERY QUARTER. NOW IF YOU'RE DEALING WITH INTELLIGENT MANAGEMENT, INTELLIGENT MANAGEMENT UNDERSTANDS THAT THEY SHRINK THE CAP AND THEY'RE NOT SELLING THEIR STOCK, IF THEY'RE BUYING BACK STOCK AT INAPPROPRIATE PRICES, THEY'RE SCREWING THEMSELVES. SO I PAY A LOT OF ATTENTION TO THAT, OK. AND THIS STOCK IS TRADING AT SEVEN TIMES EARNINGS IN A 17 MULTIPLE MARKET, LARGE FREE CASH FLOW. SURE VIEWERSHIP IS DECLINING A LITTLE BIT BUT THE MARKET IS WAY OVER DISCOUNT TO WHAT'S GOING ON THERE. SHIRE PHARMACEUTICAL, THEIR STOCK IS SELLING AT NINE TIMES EARNINGS. BASICALLY SHIRE HAS 20% OF THEIR EARNINGS EXPOSED TO A HEMOPHILIA FRANCHISE. --- IS COMING IN, CREATING SOME UNCERTAINTY. IT'S NOT GOING TO BE A COMPANY CRUSHER. YOU KNOW, EVERY COMPANY HAS SIGNIFICANT COMPETITION. ONE THAT – I'M COMFORTED BY WARREN BUFFETT WHO OWNS 10% OF THE COMPANY, WE WERE THERE BEFORE HIM, OK. BUT UNITED AIRLINES. UNITED AIRLINES IS LIKE SIX TIMES WHAT WE THOUGHT IT WAS GONNA EARN. THEY BOUGHT BACK A THIRD OF THE COMPANY IN THE LAST THREE YEARS WITH STOCK REPURCHASE. THEY'RE BUYING BACK 10% OF THE COMPANY ANNUALLY. THE INDUSTRY IS LESS COMPETITIVE VERSUS CONCENTRATED. THERE'S THINGS THAT YOU COULD BE DOING, YOU KNOW.
WAPNER: DO YOU – LET'S GO BACK TO SORT OF THE BIGGER MARKET PICTURE. DO YOU FEEL AS THOUGH BECAUSE OF THE MORE RECENT RUN-UP THAT WE'VE PULLED FORWARD A SIZEABLE NUMBER OF GAINS INTO THIS YEAR?
COOPERMAN: I THINK THE MARKET IS DISCOUNTED MORE IN THE FUTURE THAN I WOULD HAVE THOUGHT. LET ME BE HONEST WITH YOU. THE MARKET HAS DONE BETTER THIS YEAR THAN I WOULD HAVE THOUGHT AND I THINK IT'S DISCOUNTING SOME OF THE RETURN NEXT YEAR. I THINK THE FED BY ITS POLICIES HAS FORCED PEOPLE OUT OF THE RISK CURVE. PEOPLE ARE GETTING FATIGUED. THEY CAN'T SURVIVE ON 1% MONEY MARKET RATES, THEY CAN'T SURVIVE ON 2% TEN-YEAR GOVERNMENTS. YOU KNOW, SO THEY'RE LOOKING TO TAKE ON MORE RISK. AND, YOU KNOW, WHAT THE WISE MAN DOES IN THE BEGINNING, THE FOOL DOES IN THE END. NOW WE'RE NOT THERE YET. THE MARKET IS NOT EXPLOITED. AS YOU KNOW, I LOVE JOHN TEMPLETON'S COMMENTARY.
WAPNER: YES WE DO. SO WE HAVEN'T REACHED EUPHORIA.
COOPERMAN: I DON'T SEE EUPHORIA. I DON'T SEE IT IN TERMS OF INDIVIDUAL INVESTOR BEHAVIOR. I DON'T SEE IT IN TERMS OF OVERALL MARKET VALUATION. THE ONLY WAY CURRENT LEVELS WOULD BE EUPHORIC IS IF THE FUNDAMENTALS DETERIORATED BEYOND ANYTHING WE ANTICIPATE. IN OTHER WORDS, I'D BE THE FIRST TO ADMIT IF WE'RE HEADING TO A RECESSION, MY FORECAST IS IN TROUBLE. IF THE FED HIKES FIVE, SIX TIMES NEXT YEAR, I'M IN TROUBLE. BUT THAT'S NOT –
WAPNER: WHAT HAPPENS IF THE YIELD CURVE INVERTS? WHICH THAT'S SOMETHING SOME PEOPLE ARE WORRIED ABOUT.
COOPERMAN: I THINK THAT'S A MORE TECHNICAL PHENOMENON. YOU KNOW, THERE'S SOMETHING GOING ON IN THE WORLD I DON'T UNDERSTAND. I THINK MONETARY POLICY IS BEING RUN BY ACADEMICS. YOU EXPLAIN TO ME WHY A TEN-YEAR BOND IS YIELD 38 BASIS POINTS IN GERMANY. THE ONLY EXPLANATION I CAN THINK OF IS INFLATION IS VERY LOW AND BASICALLY, IT'S A SHORTAGE OF LOW RISK AND NO-RISK ASSETS AND PEOPLE -- THERE'S A CERTAIN BUYER POPULATION THAT WANTS NO RISK AND THEY'RE BUYING NO-RISK ASSETS.
LAVENTHAL: SO, ARE YOU SAYING THAT THE YIELD CURVE INVERSION IF IT HAPPENS IS A SYMPTOM, NOT A CAUSE? THAT YOU HAVE TO LOOK TO WHAT THE UNDERLYING REASON IS?
COOPERMAN: ABSOLUTELY.
LAVENTHAL: BUT JUST A YIELD CURVE INVERTING WOULDN'T MAKE IT A –
WAPNER: YOU WOULDN'T SAY IT WOULD PORTEND A CALAMITY OR CATASTROPHE?
COOPERMAN: NOT AT ALL.
WAPNER: PEOPLE SEE INVERTED YIELD CURVE AND THEY START THINKING OBVIOUSLY RECESSION.
COOPERMAN: NO. – AND ALL THIS. IT'S NOT THAT SIMPLE. IF LIFE WAS THAT SIMPLE, THE JOB WOULD BE A LOT EASIER.
WAPNER: BUT YOU DO THINK WE'VE PULLED -- IS NEXT YEARS GOING TO BE MORE DIFFICULT?
COOPERMAN: WELL AS I SAID, I WOULDN'T WANT TO MAKE A STAND-ALONE IN CONCRETE FORECAST. I THINK IF YOU SAID TO ME YOU'VE GOT TO GIVE ME A NUMBER, I'D SAY WE'LL BE UP 6% OR 7%. BUT THE MARKET COULD BE UP 10 OR DOWN 15. WE HAVE TO WAIT AND SEE HOW FUNDAMENTALS UNFOLD. I LIKE WHAT I OWN. I THINK IT WILL OUTPERFORM WHATEVER THE MARKET DOES NEXT YEAR. OK. AND THAT'S NOT BEEN THE CASE FOR THE LAST THREE OR FOUR YEARS. THE S&P HAS GOTTEN TO BE A TOUGH INDEX AS THEY KEEP REMAKING IT AND PUTTING IN NEW COMPONENTS IN THE INDEX.
WAPNER: IT SOUNDS LIKE YOU'D AGREE WITH HOWARD MARKS. I MEAN, THE EASY MONEY HAS BEEN MADE, HE'S BEEN SAYING THE LAST COUPLE—
COOPERMAN: IT WASN'T EASY WHEN I WAS MAKING IT. IT WAS VERY HARD. ABOUT 14% THIS YEAR, BELIEVE ME, IT WASN'T EASY. IT'S 70-HOUR WORK WEEKS AND A LOT OF AGGRAVATION.
WAPNER: BUT YOU GET THE POINT, RIGHT? THE S&P HAS QUADRUPLED OFF OF THE BOTTOM AND THAT'S SORT OF THE POINT HE'S MAKING. IT'S GOING TO BE MORE DIFFICULT TO MAKE MONEY.
COOPERMAN: WELL, YOU HAVE INTEREST RATES GOING UP, THEY'VE BEEN GOING DOWN. YOU HAVE INFLATION LIKELY TO GO UP, IT'S BEEN GOING DOWN, OK. I THINK THAT A LOT OF THE FUNDAMENTALS – WE'RE GOING TO MOVE AWAY FROM QUANTITATIVE EASING. SO YEAH, THINGS ARE MOVING A DIFFERENT DIRECTION. THE QUESTION IS THE PACE THAT THEY'RE MOVING.
WAPNER: WE'RE GOING TO TAKE A QUICK BREAK AND COME PACK AND I'M GOING ASK YOU ABOUT BITCOIN.
COOPERMAN: I KNOW NOTHING ABOUT IT.
WAPNER: WELL, YOU BETTER LEARN QUICK BECAUSE IT'S JUST EXPLODED THAT TRADE IN AND OF ITSELF CONTINUES TO WOW INVESTORS. WE'RE GONNA COME RIGHT BACK HERE AT THE WELLS FARGO INVESTMENT THOUGHT LEADERSHIP FORUM WITH MORE FROM OMEGA'S LEON COOPERMAN AND WE'LL DO THAT IN A COUPLE MINUTES BACK HERE ON HALFTIME.
WAPNER: WE ARE BACK LIVE IN NEW YORK CITY. THIS IS "THE HALFTIME REPORT." LEON COOPERMAN IS STILL WITH US TODAY. JOE TERRANOVA HAS JOINED US NOW AS WELL. I ALLUDED TO THE FACT I WAS GOING TO ASK YOU ABOUT BITCOIN AND JUST GIVEN WHAT'S GOING ON WITH IT, NOW TODAY IT GOES THROUGH 19,000 FOR THE FIRST TIME, WHAT DO YOU MAKE OF THIS PHENOMENON? AND THAT'S A PRETTY DECENT WORD TO USE.
COOPERMAN: JOE GAVE ME THE ANSWERS. IF YOU DON'T UNDERSTAND BITCOIN, THAT MEANS YOU'RE OLD. BLOCK CHAIN TECHNOLOGY IS INTERESTING. I DON'T GET IT. FROM 1,000 TO 15,000 IN A YEAR. THOUGH I LISTENED, MELISSA LEE HAD MIKE NOVOGRATZ, AN OLD PARTNER OF MINE FROM GOLDMAN SACHS ON, AND I'VE GOT TO GIVE THE MAN CREDIT. HE WAS THERE EARLY, HE ARTICULATED HIS VIEW AND SAID THAT HE THOUGHT IT WOULD BE 40,000 SOMETIME IN 2018. ALL I CAN TELL YOU, IT'S NOT GOING TO BE 40,000 OF MY MONEY.
WAPNER: YOU HAVE NO MONEY IN BITCOIN AT ALL?
COOPERMAN: NO MONEY AT ALL.
WAPNER: HAVE YOU PUT ANY OF YOUR ANALYSTS ON IT--
COOPERMAN: NO.
WAPNER: AND SAID FIND OUT WHAT EVERYBODY IS TALKING ABOUT?
COOPERMAN: I KIND OF FEEL LIKE WAS IT JAMIE DIMON WHO SAID HE'D FIRE ANYBODY THAT WAS—
WAPNER: HE CALLED IT A FRAUD. I WONDER— HE'S SPEAKING LATER TODAY, BY THE WAY. I WONDER IF HE'LL DOUBLE DOWN ON THAT OR SOFTEN HIS FEEL.
COOPERMAN: WHENEVER HE SPEAKS YOU SHOULD LISTEN. BECAUSE, I DON'T KNOW ABOUT BITCOIN BUT HE'S A MAN WORTH LISTENING TO. HE'S GOT A GOOD FEEL FOR THE ECONOMY AND A VERY INTELLIGENT GUY.
WAPNER: WELL LET ME ASK YOU THIS WAY. WHEN YOU SEE SOMETHING LIKE BITCOIN WITH A STRAIGHT LINE UP, THAT DOESN'T MAKE YOU FEEL LIKE – IF THERE'S A SIGN OF EUPHORIA, IS THAT IT OR IS IT IT'S OWN INDIVIDUAL THING?
COOPERMAN: THERE'S EUPHORIA IN BITCOIN. THERE'S EUPHORIA IN A SENSE IN BONDS AT 38 BASIS POINTS, BUT THE BROAD MARKET, I DON'T THINK IS EVIDENCE OF EUPHORIA. YOU KNOW, I WENT THROUGH NUMBERS IN THE CONFERENCE, I SPOKE THIS MORNING AT THE WELLS FARGO CONFERENCE, AND THEY ASKED ABOUT THE TECHNOLOGY BUBBLE, WHETHER IT'S COMPARABLE TO 2000. IN 2000, CISCO WAS LIKE 100 TIMES FREE CASH FLOW. IT'S 11 OR 12 TIMES FREE CASH FLOW. ORACLE THE SAME THING. 20 TIMES EARNINGS FOR GOOGLE, 70 TIMES EARNINGS FOR FACEBOOK. THAT'S NOT EUPHORIC. RELATIVE TO GROWTH RATES, THAT'S LOW, THAT'S LOW. YOU KNOW, THE MAIN THREAT TO THESE COMPANIES, THEY'RE GAINING MARKET SHARE AND STRENGTH EVERY DAY, IS GOVERNMENT.
WAPNER: YOU DON'T OWN AMAZON, RIGHT?
COOPERMAN: I DO OWN AMAZON.
WAPNER: YOU DO OWN AMAZON.
COOPERMAN: IF I LISTENED TO MY ANALYST JOHN WOLF, I'D BE UP NOT 14% THIS YEAR, I'D BE UP 24%. BUT, YOU KNOW, I HAVE A RELUCTANCE TO PLAY IN THE SUPER HIGH MULTIPLE AREA WHERE YOU'RE DISCOUNTING THE FUTURE. BUT AMAZON IS A CLASS COMPANY THAT IS GAINING STRENGTH. YOU KNOW, THEY'VE OUTEXECUTED EVERYBODY. THE MAJOR RISK TO AMAZON, I GUESS I COULD SAY THIS WITH TEN OTHER PEOPLE AT DINNER, I WAS HOSTED BY THE PRESIDENT IN THE WHITE HOUSE IN MID-JULY AND TWICE HE ASKED ME IF I THOUGHT AMAZON WAS A MONOPOLY.
WAPNER: THE PRESIDENT ASKED YOU?
COOPERMAN: YEAH, EXACTLY. AND I SAID, NO, MR. PRESIDENT, I THINK THEY HAVE OUTEXECUTED PEOPLE, THEY'VE DONE A VERY GOOD JOB, ET CETERA. A LOT OF THE EUROPEAN GOVERNMENTS ARE LOOKING AT GOOGLE AND LOOKING AT FACEBOOK, YOU KNOW. AND THE GOVERNMENT IS GOING TO STICK THEIR BEAK INTO THIS THING AND THAT'S THE RISK. BUT I DON'T THINK THESE ARE EXPENSIVE STOCKS GIVEN THEIR GROWTH RATES.
WAPNER: DID OTHER PEOPLE AT THE TABLE WITH THE PRESIDENT ALL PINE ON THE TOPIC AS WELL? WHAT WAS THE PREVAILING THOUGHT? IF THE PRESIDENT IS SEEKING OUT ADVICE FROM PEOPLE LIKE YOU AND OTHERS AT THE TABLE.
COOPERMAN: I CHANGED THE SUBJECT VERY QUICKLY. HE DID SAY TO ME, LEE, I GUESS I CAN SAY THIS, HE SAID TO ME, LEE, YOU HAVE A FABULOUS REPUTATION. DO YOU THINK YOUR OPEN LETTER TO PRESIDENT OBAMA CREATED YOUR S.E.C. PROBLEMS. SO SOMEBODY BRIEFED HIM. I TOLD HIM I DIDN'T KNOW, BUT, MR. PRESIDENT, THE S.E.C. TREATED ME VERY UNFAIRLY BUT I'M GETTING ON WITH MY LIFE. LET ME CONGRATULATE YOU ON YOUR VICTORY. I THINK PERSONALLY IF HILLARY CLINTON HAD WON, WE'D BE IN A RECESSION TODAY. YOU REPRESENT EXTRA INNINGS TO BOTH THE ECONOMY AND THE STOCK MARKET. AND THE BEST THING YOU CAN DO IS WORK VERY HARD TO UNIFY THE COUNTRY. THERE'S TOO MUCH DIVISIVENESS. HIS RESPONSE WAS I HEAR YOU. NOT REALLY LIKELY TO HAPPEN, TOO MUCH ANGER. WELL, WE'LL HAVE TO WAIT AND SEE, YOU KNOW.
WAPNER: WHAT DO YOU MAKE OF THE FACT THAT HE DOES CITE THE RECORD STOCK MARKET ALL THE TIME?
COOPERMAN: I LIKEN THAT TO THE FACT THAT THE STOCK MARKET IS LOOKING AT ECONOMIC GROWTH, INFLATION, CORPORATE PROFITS, INTEREST RATES, RATHER THAN WHETHER THE UNITED STATES PRESTIGE AROUND THE WORLD IS GOING UP OR GOING DOWN. WE'RE CAPITALISTS. IT'S LIKE A DRUG COMPANY HAS A FAULTY DRUG, KILLS A BUNCH OF PEOPLE, PEOPLE DON'T TALK ABOUT TEN PEOPLE KILLED, THEY TALK ABOUT THE EARNINGS PER SHARE IMPACT. SO THE MARKET IS FINANCIALLY ORIENTED. IT SAYS I CANT MAKE ANY MONEY IN BONDS SO I'M GONNA BUY MY FAVORITE STOCK.
WAPNER: GIVEN THAT IT'S A YEAR ALMOST UNDER THE PRESIDENT, TO WHAT CREDIT OR HOW MUCH CREDIT DOES HE DESERVE FOR WHERE WE ARE AT 24,000 PLUS.
COOPERMAN: I THINK A LOT. I THINK HE'S UNLEASHED ANIMAL SPIRITS TO A DEGREE. THE WAY I SEE IT AND I COULD BE DEAD WRONG, THE INTELLIGENT PEOPLE THAT VOTED FOR DONALD TRUMP A YEAR AGO SAID I KNOW THAT WE'RE GOING TO GET WHEN I GET HILLARY. I DON'T WANT IT. I DON'T KNOW WHAT I'M GOING TO GET WITH DONALD TRUMP, I'LL TAKE MY CHANCES. I'M SURPRISED, BUT THE MAJORITY OF THOSE PEOPLE ARE STILL THAT WAY. OK. AND I THINK WHAT'S GOING TO HAVE TO HAPPEN, WE'RE GOING TO HAVE TO SEE HE FINISHES OUT HIS FIRST TERM AND ELLECTS TO RUN AGAIN WHO THE DEMOCRATS RUN AGAINST HIM. I WOULD VOTE FOR DONALD TRUMP AHEAD OF ELIZABETH WARREN OR BERNIE SANDERS. THE DEMOCRAT HAS BECOME A LEFTWARD LEANING PARTY IN THIS COUNTRY. I'M CENTERIST. I'M A REGISTERED INDEPENDENT. BI VOTE THE ISSUES. BUT YOU KNOW, UNLESS -- WE HAVE TO BRING THE COUNTRY TOGETHER. THAT'S MY CENTRAL VIEW. THAT'S WHAT I THINK I'M ALL ABOUT. I'M ALL ABOUT GIVING EQUAL OPPORTUNITY, GIVING AN EDUCATION TO YOUNGSTERS, GIVING MY MONEY BACK TO SOCIETY. BUT WE – THIS DIVISIVENESS IS UNHEALTHY. BUT I BELIEVE WE'RE BETTER OFF WITH TRUMP LEADERSHIP THAN A BERNIE SANDERS OR ELIZABETH WARREN ADMINISTRATION.
TERRANOVA: SO THE MARKET CLEARLY LIKES THE LIFTING OF REGULATION. IT'S A LITTLE BIT HARD TO SEE WHAT REGULATIONS HAVE BEEN LIFTED. BUT YOU WOULD AGREE THE MARKET LIKES IT.
COOPERMAN: ABSOLUTELY.
TERRANOVA: SECONDARILY NOW, YOU'VE GOT THIS TAX BILL. WE'RE NOT NECESSARILY SURE IF IT'S GOING TO BE WHAT WE HAD EXPECTED IT TO BE.
COOPERMAN: 23, 22, 20, 19. TAXES ARE GOING DOWN FOR BUSINESS, THAT'S POSITIVE. IT'S A LITTLE DANGEROUS NEAR TERM BECAUSE WE HAVE A REGIME OF FED TIGHTENING, WE HAVE AN ECONOMY GROWING VERY NICELY, WE'RE MOVING AWAY FROM Q.E. AND WE'RE INJECTING A CERTAIN AMOUNT OF FISCAL STIMULUS, SO YOU RUN THE RISK. THERE'S A RISK THERE, SO OVER THE NEXT TWO OR THREE YEARS WE'RE MOVING THE RIGHT DIRECTION.
WAPNER: BUT IS THAT THE END OF THE ROAD? IS THERE AN INFRASTRUCTURE BILL? WAS THAT JUST A DREAM? IS THIS –
COOPERMAN: NO, I THINK HE'LL TRY TO DELIVER ON WHAT HE SAYS HE'S GOING TO DELIVER. HE'S TAKING -- LOOK, PRESIDENT OBAMA HAD A FOOT ON THE THROAT OF THE ECONOMY. BUSINESS WERE CONFUSED, THEY DIDNT WANT TO INVEST. BUSINESSMEN ARE MORE FAVORABLY DISPOSED WITH CURRENT POLICIES, THEY HAVE VISIBILITY. THAT'S A POSITIVE THING, OKAY. I THINK REDUCED TAXES HAVE TO BE LOOKED AT AS A POSITIVE. WE'LL HAVE TO WAIT AND SEE THE BIGGEST RISK I THINK FRANKLY IS IF WE DON'T GET CONSTRUCTIVE LEGISLATION THROUGH AND DON'T GET THE ECONOMY MOVING IN THE RIGHT DIRECTION, WE ARE GOING TO HAVE A MIDTERM ELECTION WHERE THE REPUBLICANS ARE GOING TO LOSE HOUSE. AND THAT'S GOING TO BE VERY NEGATIVE. THAT'S ONE OF MY TENTATIVE THINGS ABOUT THE MARKET. WE HAVE TO WAIT AND SEE. I DON'T WANT TO MAKE A 12-MONTH AHEAD CAST A STONE FORECAST. I'VE GOT TO COME TO WORK EVERY DAY AND STUDY IT. I DO SAY THERE'S VALUE IN THE MARKET. THERE'S VALUE IN THE MARKET. THE MARKET IS NOT PRICED FOR EUPHORIA AT ALL. BITCOIN, I DON'T UNDERSTAND IT. SO, I'M MORE HUMBLE. WHEN I MISS SOMETHING COMPLETELY, EVEN THOUGH IT'S UP NINEFOLD, ME DISMISSING IT IS NOT RELEVANT. BRING A GUY ON THE SHOW THAT MADE $200 MILLION ON BITCOIN AND SAID HE'S CHANGED HIS MIND, HE'S NEGATIVE. THAT'S THE GUY I LISTEN TO.
WAPNER: IT'S NICE OF YOU TO CITE MELISSA AND WHAT THEY HAVE DONE ON THAT SHOW ABOUT BITCOIN.
COOPERMAN: HE SAYS 40,000. WHAT THE HELL DO I KNOW? IF I WAS SO SMART, I'D OWN IT.
WAPNER: IT SEEMS LIKE ITS GETTING THERE QUICK. WE'LL TAKE A QUICK BREAK, WE'LL STEP AWAY. JOE'S GONNA STAY WITH US. WE THANK LEE COOPERMAN FOR SPENDING THIS WITH US, AS ALWAYS.
For more information contact:
Jennifer Dauble
CNBC
t: 201.735.4721
m: 201.615.2787
e: jennifer.dauble@nbcuni.com
Emma Martin
CNBC
t: 201.735.4713
e: emma.martin@nbcuni.com
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