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.Tory Burch Ankle Boot - Women Tory Burch Ankle Boots online on YOOX United Kingdom - 11576360BPRoberto Della Croce Loafers - Men Roberto Della Croce Loafers online on YOOX United Kingdom - 11531677MA , Aerosoles Black and Tan No Sandals , ladies SCHUTZ Karlyanna Sandals Pleasant feeling , Vans SK8HI Mte Winter Brown , L' Autre Chose Ankle Boot - Women L' Autre Chose Ankle Boots online on YOOX United Kingdom - 11485003UFNike Wmns Nike Cortez '72 - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11057234PR , womens Valentino Rock Stud Pumps At an affordable price , CUMBIA 30114 Navia-negro FASHION SANDALS FOR WOMENMen/Women Matt Bernson Pia Heels reasonable pricemens/womens Franco Sarto Sela 2 Loafers realmens/womens Seychelles Interrelated Heels Moderate cost , men's/women's Anne Klein Onmyway Flats new , Johnston & Murphy Atchison Cap Toe , Bally Loafers - Men Bally Loafers online on YOOX United Kingdom - 44929922PB , man/woman Nine West Wild Girls Loafer Loafers Ideal gift for all occasionsmen/women Katy Perry The Tashia Heels a wide range of productsGiovanni Conti Loafers - Men Giovanni Conti Loafers online on YOOX United Kingdom - 11519442AH , Elata Court - Women Elata Courts online on YOOX United Kingdom - 11503986IV , Cuoieria Espadrilles - Women Cuoieria Espadrilles online on YOOX United Kingdom - 11363907HO , Seboy's Ankle Boot - Women Seboy's Ankle Boots online on YOOX United Kingdom - 11365499RRRick Owens Sandals - Women Rick Owens Sandals online on YOOX United Kingdom - 11509353RXAlberto Fermani Boots - Women Alberto Fermani Boots online on YOOX United Kingdom - 11554445UIMarc Ellis Boots - Women Marc Ellis Boots online on YOOX United Kingdom - 11533337SE , Zinda Open-Toe Mules - Women Zinda Open-Toe Mules online on YOOX United Kingdom - 11407456MPSteve Madden Nude Leather Chiara SandalsMinnetonka Winslet Kick back and relax with the cozy Minnetonka Winslet sandal! , Nike Air Max Men’s 7 Women’s New Sneakers , MISS Marc Jacobs Black Brigitte Sandals New design , Nike Mens Air Max Visn New 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.