Cooperman joins us for the hour. The Investment Committee is ready to go. Halftime report starts right now. Welcome. Good to have you with us on this tuesday. Our Investment Committee here today, josh brown, stephanie link also with us from boynton beach, florida, leon cooperman, we will get to the selloff in the market today, the fall off for apple first a story thats new at noon today. It is a new position position for David Teppers appaloosa intel sat is negotiate with the fcc. Tepper writing the governments proposal is quote manifestly unfair to the company in part because the terms are difficult to meet. Tepper projecting accepting the proposal would take on serious financial risk he wants a new agreement with the fcc or face the possibility of bankruptcy or litigation from shareholders i spoke with tepper. He said, quote, he want a smart agreement for all parties and this isnt smart for anybody you can see the stock there is a big mover today, up more than 17 . It has been a loser over the last year, down 85 . Again, getting a big bump today on news that David Teppers appaloosa has taken a big position there the stock is up nearly 17 we will keep our eye on that throughout the rest of the trading day and beyond. Meantime, apple warning it wont meet its guy apsz for the current quarter. That has the stock market a bit upset today. You notice that stock is down. The overall market is down the dow down just off the lows of the day, about 270 points i want to welcome in Lee Cooperman who joins us from boynton beach, florida lee, it is nice to see you again. Thank you nice to be with you. It is a good day to talk markets you were last with us on november 14th. You said the market was in a zone of fair value s p is up 9 9 since then. Where are we today i would say many times i have been on your programific at that tony quoting bill tempan ton, bull i would say we are this the early stages of knocking on the door of euphoria but not quite in euphoria. Certain parts of the margaret are in euphoria like tesla, other markets like energy are in pessimism. I am trying to find things that make sense conditions for a dig beklein are not present. Excelling inflation, recession, hostile federal, big economic surprise which you cant forecast that cause bear markets. They dont exist on the fed side they are creating this rise in the market think about it if you are a safer you are getting no return on your savings. It is financial suppression. Tenyear Government Bonds, 1. 5 . Lets say you keep 60 of the one half 60 basis points. You have a negative return i think they are forcing people into the stock market. Do you think there is earning growth to carry the market higher after what was a multiple expansion driven rally of 2019 absolutely. I think earnings could probably grow 5, 6, i would not be thrown off by the markets action today. The market thus far this year, even after today is probably up close to 4 . You multiply that by six, thats 24 of an annualized rate. In economic growth, corporate profit, valuation wouldnt justify that kind of rise. I think the market is prone to a correction and setback, but a big decline, the conditions arent present. What about the fact that the change what about the fact. It would take a change in fed policy. Which doesnt seem to be happening any time soon. What about the fact that you have such a small number of mega cap stocks that are accounting for the majority of the s p 500s gain for the year, one of which you known is microsoft. We own google, we own microsoft, we own facebook, we own some amazon. You are right in the you are right there in the sweet spot of this heal. That doesnt make you nervous at the same time . 15 of my portfolio we have a contrary bet on, we have about 15 percent of the portfolio in energy. I think the market has gone overboard in their negative few of energy. It is like they cant own enough tesla and cant divest enough of their energy the fact is if the economy grows Energy Demand is going to grow electric vehicles are 2 of the automobile population. I am 7, i doubt very much that i am 77, i doubt very much they will be the majority vehicles in my lifetime. I think the margaret is too pessimistic on energy. They are buying back equity, they are selling half of asset value. Supply is shoring uppings assuming china cures their coronavirus. Practice, which we think they will cure, then demand for energy will pick up in the second half of the year and i think they are extremely cheap. There is no fear that you have that people are too complacent about the coronavirus . That the chinese dont seem to have a handle on it in any way, shape, or form, and no one knows where else it is going to go or to what magnitude it will go there around the rest of the word how can we be so sure all of this is going to blow over in the near term. I lock at Bernie Sanders as bigger threat than the coronavirus how is that . First it was Elizabeth Warren you have moved on to bernie. In all hon, i dont have any insight into the coronavirus beyond what everybody else has but i assume when all the great minds in the scientific world focus on this problem that in three or four months, this will become resolved, much the way sars and the ebola virus was dealt with thats my hope thats my expectation. Thats my aspiration the human suffering is great in this location it is significant. I think the odds are by june this will become less of an issue. You said we are knocking on the door of euphoria you said that a moment ago what knocks the door down . What would you look for . Higher prices or change in inflation, recession expectatioexpectatio s, most look a change in the fed. The fed is discounting one or two rate cuts. I dont see why we would have cuts retail is strong, employment is strong, consumer net worth is at a record level, economy growing in line with trend corporate profits are good if businessmen were possess messic they wouldnt be buying back so much stock i think Interest Rates are fuelling the market. They are just unappealing. I wouldnt want to buy a tenyear Government Bond at 1. 5 with your money. Can i find many things in the stock market that make much more sense than bond. If there is a bubble the bubble is bonds, not equities i would say another 5, 6 up in the market quickly would be euphoria, my may of thinking i want to make it clear. Yeah. I am not a big long term optimist i think things are out there very troubling to me. Right. I think number one is Bernie Sanders. If you listen to his proposals, it is only a 6 trillion annual deficit. I think also he is misrepresenting himself. He is not a socialist. He is rather a communist there is a difference between a socialist and a communist. Socialists advocate a redistribution of wealth the communists advocate nationalizing the means of production and tearing down the house that wealth has built. And all you have got to do is read the wall street journal editorial on this past saturday on bernie and understand what he stands for the fact that he is doing so well in the polls is troublesome. I hope the country is not prepared to elect a communist or socialist. If we do, you know, i think then the market is in store for big problems. Dont you think, it is somewhat perverse where people think that Bernie Sanders is bad for the stock market, but yet as he comes higher in the polling, it doesnt necessarily knock the stock market down because there is a belief in some quarters that Bernie Sanders cant get elected, that he cant beat trump, and thus the stock market has remained where it is rather than fall out of bed. Yeah, i think the market is complacent in that regard. I think the market is right. The market is assuming that President Trump is reelected if he is not reelected, the only guy in my opinion that could beat him is Michael Bloomberg. And bloomberg or trump would be acceptable to the market thats what the market is assuming but it is assuming trump in the main and i think the market is assuming that the coronavirus problems dissipate in the next quarter or so. I find little reason we are going to do this political conversation we were going to do the political conversation later but lets do it fully now. I notice your support of bloomberg. You made that no secret in other venues and here in the past. I am sure you will do it again today. Bloomberg comes out today with a financials a transactions tax. What is your reaction to that . If that had come from sanders or warren you probably would have said, well thats crazy. Now that it is coming from your guy, what do you say well, i am in favor of fewer taxes. Let me just say, hes facing an interesting problem. The problem is very simply, hes annate ma to everything the Democratic Party stands for now, right . The party has moved to the left. Hes not a leftist hes a centrist. He is trying to basically get the support of the party this is my guess i am not a politically involved guy you can check the record until recently i was registered independent. I switched over to democrat so i could vote inthe primaries in florida. I dont think the Democratic Party wants Bernie Sanders or Elizabeth Warren to head their ticket if thats right and nobody break out in the primaries, i think you go to a brokered convention. Ic Michael Bloomberg has a good shot in a brokered convention. He is trying to court the party. You know, i kind of recall will rogers he said,if onetenth of what was promised to us by politicians in their state of the union message, speeches, there wouldnt be any going to heaven. I dont believe how much Michael Bloomberg believes he can enact. I think he is trying to raise his level of appeal the other democrats. Sure. What he says and what can actually happen are two different thing. We know that but you do are you saying you do not support his financials transactions tax well, what i support is that we have to start to do things about the budget deficit whats not sustainable is we are running a trillion dollar deficit in a fully employed economy. Thats not supposed to happen. We are pulling demand forward. We have to deal with this. You know, the tax didnt have to go up. I have said personally that that is where the debate shun forget the wealth tax. Not only is it unconstitutional. It is stupid basically lets agree as a nation that the maximum takes rate should be on wealthy people that will define the wretch yield to the government and the government has to size itself to the revenue yield. I said i am prepared to work six months of the year for the government and six months for myself i love thomas siouxel, he made an observation he said since this is an era when many people are concerned about fairness and social justice, what is your fair share of what someone else has worked for . What is your fair share of what someone else has worked for . I got you but let me i dont want to get off of this point about what bloomberg and what he is proposing today. It is significant. There are i havent studied it closely, but i would assume last week he came out with a 5 trillion package. I believe when we worked through that it could take 15 off the s p earnings whether you make up for it with an expansion of multiple is debatable. But something is going to have to deal with the problem maybe we could keep kicking it down the road. My favorite story that i love to tell, in 1972, there were two great citizens of america, henry fell, a former goikz partner and pete peterson. Both of them were very civic minded individuals out of their own pocket they paid for full page ads to alert the public and congress of the evils of the budget deficit. This was 1972. Where are we now this is 49 years later, okay, the deficit is much worse than anybody imagined yet we have the lowest Interest Rates in the history of mankind go figure it out i dont know when the problem hits, but i would say that the deficit is a concern the me, and the need to deal with it and the longer we push. Do you think i am sorry. Do you think wall street needs to be quote, unquote reined in . Thats how some are characterizing mr. Bloombergs plan today. I dont think it needs to be reined in. That happened in 2008. The place that has to get reined in is public policy. The deficit is out of control. Not Corporate America. The deficit is out of control. How did wall street get reined in in 2008 . Oh, we are talking about the didnt lehman go out of business didnt bear stearns go out of business that was because of acts that they caused, no . I have no problem with that but their behaviors changed since then they have learned the lesson the excess what hits new the next Business Cycle is not what hit you in the last Business Cycle. It is something different. I would say the next crisis is not going to be in the private sector it is going to be in the Public Sector the deficit is too damn large and it continues to get larger and larger, and nobody, democrat or republicans, is paying attention. We are mortgaging our future this is not likely to be a 2020 issue. But it is an issue long term i have a bunch of thing that bother me about the long term, which affects now that i am running my own money and i am tax sensitive affect my thinking i think the shift to the left is a concern. The fact we could talk about Bernie Sanders being a viable candidate given every he advocates for the greatest economy in the world is scary. The debt structure of the country is scary margins are twice historical norms. They tends to be mean reverting. And the average structure has changed. In the Fourth Quarter of 2018 there was nothing going on in the economy that justified i think the greatest decline since the Great Depression flt Fourth Quarter. It was the market that there is no Market Structure left when i came to wall street 51 years ago, goldman sachs, morgan stanley, people like that, strayed stocks for 50 cents a share and the volker rule didnt exist. Now commissions are near zero plus brokers dont stabilize and bring bids to the market the system is not viable because 80 of the volume offboard thirdly we eliminated the uptick rule which gave raise to quantitative traders that know everything about price nothing about value. They buy strength and sell weakness and when there is a fundamental development that would justify a more meaningful decline in the market lets face it. Recessions cause bear markets. Bear markets going down more than 20 every measure of valuation in the market is extromly extended with one exception the market is cheap relative to Interest Rates the trouble is f Interest Rates belong at 1. 5 in the ten year and fed says funds are heading lower you are not supposed to make 25 in the stock market you make 5 for 6 . Through february, friday, you were up 4. 8 multiply that by six the market is ripe for setback but we are not ripe for a bear market thats my major message. What there was a period of time where, you know, i dont think you and frankly from some of our conversations i dont think that bloomberg himself thought that he could be elected president. Whats changed do you think that he can beat donald trump if he is the nominee . I think he has a shot lets face it. I believe again, i am not expert on politics but i believe no sitting president has lost reelection when you are not in a recession. The fact of the matter is, the president deserves very high marks for the performance the economy. You know, the economy and the stock market are record high employment is at a record high unemployment amongst minorities is at a record low he opened up a long overdue dialogue regarding trade with china. He opened up a constructive dialogue on illegal immigration. He done a lot of good things his problem is his deportment. I give him an a in economic performance. I give him a failing grade in deportment mitt romney, as i have said often is not a jack ass. I actually voted for him Rex Tillerson is not dumb as a rock he did a great job running exxon. John mccain was in fact a true war hero and jonathan dingle, oeven thoug he has different politics than me i would not say he is looking up we have to change the dialogue this is where i think bloomberg will do it i believe mike entered the race for altruistic reasons i think he thinks he is the only guy who can beat trump i agree with that. We will wait and see whether he is acceptable to the Democratic Party is one thing. Whether he is acceptable to the whole country is another thing he is a good person. I cant find anything to criticize him. I knew him had at Salomon Brothers he lost out. He was unemployed in the mid 30s. He developed a data system, he developed a company you cant live without if you are an active investor in the market. He is extremely charitable and did a fantastic job running the largest city in the world, the is it city of new york, nine or 12 years i dont find anything to criticize him. Give what we know today with what mr. Bloomberg has proposed as relates to wall street and you are admittance that he has moved to the left. He has as you say, no choice, thats where the party going he is not a leftist he moved i understand. He is trying to be acceptable to his party. I got you so who would be better for the stock market then . Donald trump or Michael Bloomberg, given all that we are talking about, a movement to the left, a transactions tax. Probably i would say probably trump but you know, at the end of the day, when you go into the voting booth and you close the curtain you decide whether you vote your economic self interests or you vote your values what are your values my values suggest that the president of the country should be a person of integr