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.Liu ?Jo Shoes Sneakers - Women Liu ?Jo Shoes Sneakers online on YOOX United Kingdom - 11141484IT , Elvio Zanon Ankle Boot - Women Elvio Zanon Ankle Boots online on YOOX United Kingdom - 11538914WS , Jeffrey Campbell Sandals - Women Jeffrey Campbell Sandals online on YOOX United Kingdom - 11404540KKJessica Simpson Boots - Women Jessica Simpson Boots online on YOOX United Kingdom - 11480010RMREFRESH 63896 THIGH BOOTS FOR WOMENWomen's Greenish Blue Sandals Cheap ideal , Dolce & Gabbana Flip Flops - Women Dolce & Gabbana Flip Flops online on YOOX United Kingdom - 11365816FR , Samsøe Φ Samsøe Vela-10060 - Sneakers - Women Samsøe Φ Samsøe Sneakers online on YOOX United Kingdom - 11538642AK , Moa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11580370PKLucy Choi London Court - Women Lucy Choi London Courts online on YOOX United Kingdom - 11475732WCTweedy heeled wellington boots , black, Be OnlyAdidas Replay SOFLY - Trainers - green , Diemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11500555UF , D.A.T.E. Sneakers - Men D.A.T.E. Sneakers online on YOOX United Kingdom - 11142531UWVersace Sneakers - Men Versace Sneakers online on YOOX United Kingdom - 11422939PT , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11497197UAmen's/women's Bebe Brienna Sneakers & Athletic Bebe Cheaper than the price , Men/Women Massimo Matteo Wing Tip Bal Oxfords Let our products go to the world , Marian Court - Women Marian Courts online on YOOX United Kingdom - 11378126UKNike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11371200DE , Clone Diamond - Sandals - Women Clone Sandals online on YOOX United Kingdom - 11247438GK , Brian Atwood Sandals - Women Brian Atwood Sandals online on YOOX United Kingdom - 11529273DD , Ebarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11553425XNMassimo Granieri® Sneakers - Women Massimo Granieri® Sneakers online on YOOX United Kingdom - 11467980WM , PSoeOUtR Steve Madden Francine Heeled Sandal , zjgQGLhE To Boot New York Corvera , z6Z5yVsK HOGL 4103524 SHOES FOR WOMEN , Durable service FLY LONDON Yaba702Fly , Giuseppe Zanotti Red Satin and Leather Clear Cystal Silver Strappy Heels Sandals , Rag & Bone White Kent High Top Sneakers
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.