Billionaire hedge fund manager and ex-Goldman Sachs partner Leon Cooperman is “not a fan” of President Donald Trump’s tariffs on America’s allies, and hopes he will back down, he told CNBC last week. “If he listens to his advisers, hopefully, enough sane people in Washington will tell him ‘let’s back off on this trade stuff’.”
Trump recently decided to impose tariffs of 25% on steel imports and 10% on aluminium imports from Canada, Mexico and the European Union, who were quick to announce retaliatory measures. This is not necessary, reckons Cooperman. Trump “can accomplish what he wants to accomplish… in a different manner… We need someone who unifies people.”
Cooperman also fears that 2019 could be rocky for equities as the US central bank, the Federal Reserve, tightens monetary conditions under new boss Jerome Powell and inflation rises, helped by a healthy labour market and tax cuts. “In the next 12 to 24 months… I think that inflation and interest rates will catch up to the market as we normalise.”
He isn’t ready to rush to sell up yet. “The conditions normally associated with a big decline are not yet present.” But the market is expensive by historic standards – so if stocks do carry on rising, says Cooperman, investors should take some profits. And watch out for rising US Treasury bond yields – “if we get the ten-year [yield] over 3.5% that could be very competitive to the stockmarket”, as investors would be drawn to the extra income on offer.