Legendary investor Cooperman bets on a U.S. recession next year, with surging inflation set to heavily hit U.S. stock valuations.

Billionaire investor and Omega Advisors CEO Leon Cooperman warned this week that the U.S. economy could enter a recession within the next year, dragging down the stock market. He noted the current market resembles the collapse of the "Nifty Fifty" in the 1970s and expressed concern over cooling optimism around AI. In an interview with CNBC, Cooperman said, "I think we will have a recession sometime next year, which could cause the market to fall." He also pointed out that the market’s profit growth expectations for the S&P 500 are off the mark (FactSet data shows this quarter’s year-over-year increase is projected to exceed 50%). Currently, he is clearly deviating from Wall Street’s mainstream bullish views—particularly avoiding tech stocks—and holds a negative outlook on the overall market. He reminded investors not to underestimate the risk of a rebound in inflation. Brent crude remains at a high level (around $90 per barrel, more than 20% higher than pre-Iran-conflict levels), while July retail sales fell 0.6% month-over-month, far below the expected 0.1% growth. Higher inflation could hit stock valuations, mirroring the sharp decline in growth stocks after 1970s oil price surges. "The most dangerous phrase in investing is: ‘This time is different,’" Cooperman said. The current market is almost universally bullish, and once a negative catalyst emerges, investors could sell off quickly. Meanwhile, bond market volatility is adding pressure: the yield on the U.S. 30-year Treasury bond hit 5.33% on Tuesday, the highest since June 2007, breaking through a three-year trading range. Analysts warn that if yields rise rapidly toward 6%, the stock market could face further valuation pressure. Historically, after a similar trend in 1999, the S&P 500 subsequently entered a correction amid the dot-com bubble burst.