Leon Cooperman, Chairman and CEO of Omega Advisors, said there are four things to worry about when you look at the stock market cycle.

“The first is recession, that’s what generally causes bear markets,” he said to Yahoo Finance at an event for the Portfolios with Purpose charity. “Second is a hostile Fed. Third would be a euphoric, overvalued market, which itself becomes vulnerable to a big decline. And fourth would be some unforeseen geopolitical event.”

Cooperman said the headlines of President Trump’s involvement with Russia have been a distraction from his economic agenda, and it would fall under that fourth category of worries.

“Let’s put what’s going politically in Washington right now as an unforeseen geopolitical event,” he said. “I don’t think [Trump] will be impeached, but the dialogue is not healthy and it certainly delays his plan.”

Despite this worry, Cooperman said he sees the market slightly higher at year-end. “If I’m right that there’s not a recession in the offing, if I’m right that the Fed goes very gradually… I can’t forecast a geopolitical event, I don’t see many signs of euphoria in the market… I think the market’s fully valued, but it’s not euphoric.”

Regarding the current mood in the market, Cooperman quoted British investor Sir John Templeton who said, “Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria.”

“Pessimism is gone, optimism is here. But I see very few signs of euphoria,” Cooperman said.

He noted that talking of cutting corporate taxes, which was included in Trump’s tax blueprint released last month, has fueled animal spirits in the market and will lead to a boost in company earnings.

“I’m very much a numbers guy,” he said. “If you take the corporate tax rate from the mid 30s down to the high teens and you repatriate a couple trillion dollars of offshore earnings, we’re talking about earnings added on to the S&P of over $10 a share. That’s a very significant development.”

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Nicole Sinclair is markets correspondent at Yahoo Finance.

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