Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.Twin-Set Simona Barbieri Sandals - Women Twin-Set Simona Barbieri Sandals online on YOOX United Kingdom - 11561152KT , O'dan Li Ballet Flats - Women O'dan Li Ballet Flats online on YOOX United Kingdom - 11547520HG , Today By Calpierre Loafers - Men Today By Calpierre Loafers online on YOOX United Kingdom - 11551611LCMi Amor Court - Women Mi Amor Courts online on YOOX United Kingdom - 11459609JJAndìa Fora Sneakers - Women Andìa Fora Sneakers online on YOOX United Kingdom - 11252277JKTRUE HEART S021800913bsj BALLERINAS FOR WOMEN , Under Armour Ua W Threadborne Fortis - Sneakers - Women Under Armour Sneakers online on YOOX United Kingdom - 11329507GW , Women's Bucco Brown Woven Sandal Wedges Known for its beautiful quality , Donald J. Pliner Black 'omara' Nappa Leather Slingback Heeled SandalsValentino Green and Blue Rockrunner Sneakers 11us 41eu Sneakers , WOMEN Giuseppe Zanotti Camel Platforms King of the quantityValentino Black Vltn Logo Low Top Sneakers , Asics Tiger CURREO II - Trainers , Buffalo TOSIO - High heeled ankle boots Colour: tanmen/women Rieker 74673 Peggy 73 Boots Elegant appearance , men/women Blondo Bailey Waterproof Espadrille Loafers Elegant appearancemen/women VOLATILE Constance Sandals Don't worry when shoppingWide fit leather ballet pumps , black, Castaluna , Valleverde Loafers - Men Valleverde Loafers online on YOOX United Kingdom - 11555630HN , man/woman ED Ellen DeGeneres Chapala Sneakers & Athletic ED Ellen DeGeneres Various goodsScholl Boots - Women Scholl Boots online on YOOX United Kingdom - 11562064QN , Santoni Sandals - Women Santoni Sandals online on YOOX United Kingdom - 11185939TI , Elisabetta Franchi Court - Women Elisabetta Franchi Courts online on YOOX United Kingdom - 11250434JSPuma Peacoat X Rihanna Creeper Sneakers , G3NqlqW0 MARIAN 1600 SHOES FOR WOMENNew style Marc Fisher LTD UnanaNew market Corral Boots R1226Stuart Weitzman Gold Sparkly Peep Toe Heels SandalsWomen's Valentino Tabacco Garavani Rockstud Sandals Low priceMISS Matt Bernson Classic Sandals New product ,
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.