President Biden, Sarah Bloom Raskin, Jay Powell discussed on Squawk Pod
I don't know if it's 13,500 that have been lost from Russia's social and killed. I don't know if it's closer to 6000, but in any event, it's probably more than we lost in 20 years in both Iraq and Afghanistan. We saw this coming. I think yesterday after Joe Manchin made that move Sarah bloom Raskin is withdrawn from consideration as President Biden's nominee for fed vice chair for banking supervision one day after the democratic senator from West Virginia said he opposed her nomination and you would have needed someone to flip on the impossible that a Republican would have. Susan Collins looked unlikely. She said no. She said, no, and you had other concerns that were Murkowski. I don't know. That's out and about again. Talking. Making her confirmation unlikely who withdrawal could clear the way for confirmation for President Biden's other fed picks. They've been kind of a hold on those, including chair Jay Powell, has been nominated for a second term to lead the Central Bank. I had forgotten that they put all the nominations together as one. And it was a package deal. Pal was already renovated. It was already reconfirmed. Probably a good thing to get your fed chairman confirmed, given the difficulties they're going to be facing right now. This is my favorite story. Is this good? This is a good one, I think. I always like fall. I hate the spring week. Do you know how tired I am? I know, but I like falling back. Yeah, but I hate springing forward. It's worth the trip. Because you never get the hour back. You never do. Yesterday, the Senate passed legislation to put an end to the biannual changing of the clocks. The case for permanent daylight saving time is clear. So let's go from polar to solar. Cutting back on the sun during the fall and winter is a drain on the American people. We must pass the sunshine protection act with almost no warning and no debate. The chamber at unanimously passed with their calling the sunshine protection. He's going to be against that. Which would make daylight savings time permanent. Bill's fate in the house is uncertain, but the United States tried to ditch the clock switching before. That was back in 1974. After a widespread discontent though, they went back to flipping the clocks twice a year, but this is the time of year when we pay for it. It's been so tired in that way. Oh, no. Been that way since World War I. Yeah, and what is it is it is around agriculture. It gets for farmers, yeah. Which I understand, and I don't really want kids standing out waiting for buses for dark. In the morning. It'd be good if you could switch back and forth for when you wanted the light. It would be good if you just accepted the light hours in the day, but I don't think we have the power to do that. That's right. It's kind of up to the sun. And there's still there's long days in summer and short days in winter, but they're all. Well, it's been full. They're all 24. They're all exactly 24 hours. We've made dinner late every night because I keep getting fooled, not realizing how late it is. Like, oh my gosh. That's not good. That's not good to go to bed at 8 o'clock after a late dinner. Take it from me. Yeah. You get fat, you don't digest things well, you don't sleep well. Coming up. Personal experience. Yes. Very recently. Yes, I got so many personal experiences. Oh my God. I'm here. Had to be here for you. And you had to be here for me. Next, on squawk pod. Legendary investor and hedge fund manager, Lee cooperman, weighs in on the markets, the fed and tells us how he's putting his money to work. Even though I'm not over optimistic, I do think stocks represent the best game in town. It may be the best asset in the bad neighborhood. And later, a stunning shake up in the Starbucks C suite. But one that's been brewing for a while, the company's chair melody hooks and joins us with all the transition details. It's had a great job for us at Starbucks and really wants to move on to do something else now. And then we have this MVP. One of the greatest players in the game on the bench, so the board called them up. I'm Sarah eisen, from the open to the close. CNBC has you covered. From what's driving the market moves to how investors are reacting, we'll guide you through each trading session and bring you some of the biggest names and newsmakers in the business. Be sure to follow and listen to CNBC's closing bell podcast today. Welcome back to squawk pod from CNBC. Leon cooperman is a billionaire investor longtime hedge fund manager and philanthropist. He is chairman and CEO of his family office omega. Cooperman has a Wall Street career dating back to the 1960s. He rose from modest beginnings, growing up in The Bronx and putting himself through Columbia business school before a long career at Goldman Sachs, investing his own money now, cooperman's portfolio includes some large cap technology names, healthcare, even casino stocks. He joined Joe kerning and Becky quick on our TV broadcast this morning to discuss the recent market swings, inflation, the Russian invasion of Ukraine and how a busy news cycle impacts where he's putting his money now. I'll hand it off to Becky. Lee, it's really good to see you this morning. There's a lot on the table. Yep, yep, nice to be with you. So what are you thinking right now? The last time we talked to you, you were talking about how you were a fully invested bear as your situation changed at this point. Are you more pessimistic? Are you more optimistic? I would say more pessimistic and less than fully invested. I think the Ukraine situation is serious. I can't handicap it. I basically, you know, we got a madman running Russia and I think, again, I have no particular expertise here, so I want to be careful in making sure that this and at opinions are like noses. Everybody has one. I think Putin is a dead man. He knows it. And the question really is, is he go quietly? Or do you try to take the rest of the world with him when he goes? And I don't know the answer to it. You know, he's got nuclear capability, which is troublesome. And I think that complicates the situation. But I really, when I was more optimistic, I said that I was long-term bearish because I really felt that the nation was following very inappropriate fiscal monetary policies. You know, I think I said this on your program. Last time I said if power write an inflation, I'd tip my hat to him. I mean, 64% of a typical business course is labor. Labor is not going down, you know? And the commodity inflation, every executive I talked to just tells me about how the questions are out of sight. So I don't disagree with those who think inflation may moderate to some degree from 8 or 9%, maybe 5%. That's more than twice what the fed's target is. So we've had very inappropriate monetary policies. We've been inappropriate fiscal policies, and either we're going to have to pay the piper or we're going to get currency. Just think about the debt build up of the country. The station was founded in 1776. We had no national debt. In 2017, there's 241 years later. We had national debt of 20 trillion from 2017 to 2021. We've got 20 trillion to 30 trillion in four years. That's a growth rate in debt for an excess of the growth rate of the economy. So I would say I'm worried about fiscal and worried about monetary policy. Interest rates are far too low for what's going on in the economy. I remember over the course of my career that I used to get a real return in bonds if you say the inflation rate is running 8% and then ten years a little over 2% if a negative return. And I think that that's got to change. And we're facing a regime of rising interest rates rising taxes, fiscal situation is out of whack. And continued higher inflation. And I come down to questioning myself, what is the appropriate multiple for the market? I say the appropriate multiple in my view is about 18 times in 18 times to 25 or whatever the number is in the S&P earnings. Basically, it's about 4000 and a little bit above that. So we're not undervalued. We're overvalued. And I think conditions are going to deteriorate to some degree. You think we've already seen the highs for the year with the stock markets? Well, I'd say at least a 50% probable, look, the volatility is unbelievable. A year ago, you guys were talking about negative oil prices. And then we go to a $130 in a year. So there's a lot of paper trading hands. But I would say that, yes, I think that the highs are in for the year. And if we go to a new high, everybody very modest amount, and I would be aggressively selling. And you know, I made my money as a bull. I'm not a bear. I'm not short many things. And I say on the plus side, I think we're in the land of the blind and what I'm in is king. I'm not keen about investing a lot in China. I think given Europe's proximity to Russia would say they're not going to be a favorite place to invest. So there are plenty of cheap stocks in the United States. So, you know, I'm flying playing things to do even though I'm not overly optimistic. I do think stocks represent the best game in town, but maybe the best asset in the bad neighborhood. Well, let's talk specifically about those in just a moment, but if you are under invested, that means you have money sitting on the site in cash. Is that for an opportunity? Because if it's a high inflation like that, that's you don't want cash either. Well, you know, sometimes the most painful asset is the right asset to hold. So I would say, given everything going around the world, I don't mind having some cash. Again, you know, I'm not going to compete with the S&P 500. I run my own money, my goal in life is to make money for two reasons. One, if I make money, it validates my views and I have a certain amount of pride and arrogance like everybody else I want to be right. I don't want to be wrong. And number two, I veer marked all my money for charity and I like to give away more money. So if I'm right, I have more money to give away. And that's kind of my mantra. You don't have a lot of support. How much do you have in cash right now that makes you comfortable? What percent? I would say about 10%, which is, you know, a lot of dollars. And I've been very lucky. I have more money than I need. I would say that it doesn't bother me. I find things to do, but I'm limited by my concern about the macro picture. And I'm not interested in being fully invested. I'm certainly not interested in being a margin. And I don't care about the S&P 500. I care about absolute dollars. You've been looking at energy and investing in energy for a while. I came into last year, you know, a little nervous at the moment because when I came into last year, we had a very overweight energy position. I turned to be right. So I had a very good year last year. Family officers up about 35%. I think energy stocks are cheap relative to the commodity. I think most of the stocks were involved in discount maybe $65 oil. We're currently about 95 and this county about $3 gas and Carly gets about four 75. They're generating enormous cash flow, and I don't see the administration doing the right thing. You know, it used to be drill drill drill. You know, now they're lower the gas tax, which I get stimulates consumption. They don't understand it. They're not capitalists. You know, I have a lot of things that bother me. You know, I don't like the leadership in Washington, you know, both on both sides. You know, we have the leadership at a crisis environment. Right now we're not in a crisis. We're moving towards one. Labor seems to be getting the upper hand. Which is a change. Fixed income seems totally mispriced. I don't think the 25 basis points of the issue today, the issue is what is a dialog going to be from pal. And he's been very wrong. And he seems to be have elevated societal issues relative to inflation as his concern and we'll see if he changes the dialog. But I think he should. I think Larry summers is a brilliant economist. He's in the right track. I agree with Larry. What's your best idea right now of all the things you're looking at? Well, it's extreme. Your life is funny. You know, it's very complicated and I want to take too much time on it. Life as far as I'm negative and bonds, and my largest position to family office is legato debt. Legato owns about 35 megahertz of spectrum. It shows you how paralyzed the government is. They've spent ten years trying to get this thing licensed. All of a sudden, the Department of Defense, I think bogus Lee raised some issues about the spectrum to figure the needs, the FCC 5G 5G amongst other things. The FCC study this issue for 5 years, 5 years, and concluded by a 5 to zero bipartisan vote that the Department of Defense had no case. The first lean paper, which was trading around 76 cents in the dollar, has a 15 and a half percent pick coupon guaranteed to be paid to the end of 2023. So you're going to get 31 points of interest. You can get 24 points of capital appreciation. So I can make about 55 points on a 76 investment and the question you have to answer is, what is the asset worth? I think the asset is worth materially in excess of the value of the bonds, the accretive value of the bonds a billion, and I think the asset they have is probably worth 12, 14, 15, 16 trillion, $1 billion. So it's often and we tend to go after beaten track. I like a couple energy companies in Canada. You know, one I particularly like run by the way, the smartest guys in Canada, Michael rose, is tourmaline, and then the other one, his breath in law runs paramount resources. Paramount resources is like a 25 $26 stock. They have an energy portfolio of $4 a share in non income producing energy stocks. They'll be added debt by the third quarter of this year that generating about four or $500 million of excess cash beyond the dividend and the CAPEX is covered. So you have a debt free energy coming in less than three times free cash flow. You know, I got to own something like that. And he's got a lot of screen in the game. The riddell family owns half the company which is about a billion and a half, $2 billion investment. A smart guy. So, you know, I'm funny playing things to do. 5 Cigna. I'm more old economy oriented, but I spoke with the manager of Cigna yesterday. Stock is about 9 or ten times earnings to buy back a lot of stock. The earnings are growing decent balance sheet. You know, I'm playing things to do, but I have to say that I have a conservative view of the world. And I think Biden's a totally mispriced. So I have no interest in bonds in legato is really more like an equity, but I think that that's like nothing is a layup in the world we live in, but it's close to a layup, as I know. You usually are talking about names that are a little off the beaten track, but two of your big holdings are in very commonly held stocks. Technology names, Google and Microsoft. Well, you know, I would say that my window technology. I'm not a technology expert, but I think Google and Microsoft are great windows and technology. They're reasonably priced. They're higher valued than they were four or 5 years ago, but they're not excessively valued. I've made this point in the program in the past, but you go back to two periods of excess, 1972, nifty 50. Avon was 60 times earnings polar with 90 times earnings. I don't think 25, 30 multiples are high. Back in 1972, the ten year government was 6 and a half percent. And fed funds was to think about four or 5%. You know, we're talking about fed funds, maybe getting to 200 basis points over the next year, and the ten year government is two. You're going to go up. But they're not expensive relative to interest rates, and they're my window one technology. They forgot more about technology than I know. So I have my one of my biggest positions is Google, followed by Microsoft. And they've treated me well when I pay taxes, so I'm not going to sell them. I've sold off some options against my position, because I think leadership in the market is changing. But I don't know. I would say, I think we're in a market of stocks rather than stock market. If I had a guess, the analogy I use, I use two analogies. One is I talk about the pharaoh. The pharaoh and familiar with the Bible had a dream. They dream we would have 7 lean years following the 7 fat years. His dream was interpreted by Joseph in the Bible. I'm not making 7 year forecast, but I think we've pulled demand forward with inappropriate fiscal monetary policies. We have to start addressing it. The other story I like to tell is, you know, I got my MBA from Columbia business school in January 31st of 1967 and a 6 month old kid who's a very smart 55 years old now, basically, I had a national defense education act student loan to repay, I had no money in the bank. So by definition, I was broke. I couldn't afford a vacation. I went to work the next day, February 1st, 67 for my 25 year career at Goldman Sachs. February 1st, 67. That was a thousand. In 1982, it was a thousand. So I'm not making a 15 year forecast to make a 7 year forecast. I think the market is fully valued and generally speaking, the things that push to market up or changing, you know, we had a very, very accommodative fed. They're changing. The pace of change is the issue. We have an oncoming, we have more concern about the economy. Given what's going on in Russia and inflation, I think is more concerned about the economy. And my heart goes out to the people in Ukraine. They're fighting heroic fight. But it's crazy what's going on..