As a young boy growing up in the Bronx, Leon Cooperman could buy two pretzels for a nickel from a street vendor called Bob. Those days are long gone.
While Cooperman has significantly deeper pockets today, as the chairman and CEO of Omega Family Office, he was still shocked at the $13 price tag per pretzel and $6 bottles of water at the Yankee Stadium this summer.
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“Prices are crazy,” the hedge fund billionaire said on Fox Business’ “The Claman Countdown”, sharing that he also bought his youngest grandson a Yankees cap for a cool $56.
Inflation isn’t only stinging Americans at the ballpark; its effects have rippled through consumer prices, from gas and groceries to both new and used vehicles.
The Federal Reserve’s efforts to tame inflation through “higher for longer” interest rates could have a negative impact on “corporate profits and economic growth,” according to Cooperman — something that savvy stock market investors will want to keep a keen eye on.
Higher for longer rates
Last year, Cooperman said Fed chairman Jerome Powell “has no idea how high interest rates have to go to stem economic growth” — and he stands by that comment today.
“I don’t think interest rates are at a peak,” he said ahead of the Fed’s rate announcement on Nov. 1.
The problem with interest rates staying “higher for longer” is that it will keep borrowing costs high at a time when the U.S. government’s budget deficit and national debts are growing.
“I’m less worried about inflation than I’m worried about the fiscal position of the country,” said Cooperman. “We’re borrowing from the future through extremely aggressive fiscal policies, which bear no relationship to what the country can afford.”
The U.S. Department of the Treasury recently released its Final Monthly Treasury Statement for the fiscal year through Sept. 30, 2023, showing a deficit of $1.7 trillion — the largest outside the COVID era.
The deficit is up 23% from the previous year mainly due to a drop in revenues and an increase in spending on Social Security, Medicare and record-high interest costs on the federal debt.