At the Delivering Alpha conference, Billionaire investor Leon Cooperman said the latest central bank move is “screwing the savers” as the Federal Reserve followed up their July rate cut with another quarter-point rate cut on Wednesday.
“I side with the two Fed governors that were against cutting rates. Rates were already low,” Cooperman said. “Just think about it this way: You have a 35-40% marginal tax rate, you’re getting 2% on your cash if you’re lucky. You keep 60% of the 2%, that’s 1.2%. The inflation rate is running 2%: You have a negative on savings.”
The central bank didn’t give the capital markets a clear-cut direction on whether more forthcoming rate cuts were ahead. They did, however, cite the U.S.-China trade war as continued cause for concern.
“The weakness in the economy, in my opinion, is directly attributable to the president’s dialogue on tariffs,” Cooperman, who founded Omega Advisors in 1991, said from the conference. “What we do with China, I understand makes sense. But threatening Mexico, threatening Canada, threatening Europe makes no sense.”
“This has created great uncertainty in the business community,” he added. “They don’t know where to put the supply lines, they don’t know where to build their plants. So their cutting back on” capital expenditures.
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