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.Donna Più Ankle Boot - Women Donna Più Ankle Boots online on YOOX United Kingdom - 11527162EKGianni Marra Ankle Boot - Women Gianni Marra Ankle Boots online on YOOX United Kingdom - 11543337GJVans SK8HI Mte Winter BlackJ|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11292767LDOvye' By Cristina Lucchi Court - Women Ovye' By Cristina Lucchi Courts online on YOOX United Kingdom - 11563523VHPellettieri Di Parma Boots - Men Pellettieri Di Parma Boots online on YOOX United Kingdom - 11505330VO , Mercedes Castillo Open-Toe Mules - Women Mercedes Castillo Open-Toe Mules online on YOOX United Kingdom - 11475543NMMen/Women Giesswein Gretchen Slippers Crazy price, BirminghamMen/Women IZOD Noland Oxfords Rich design , Suede classic trainers , khaki, Puma , Carvela SALLY - Ankle bootsMenbur High heeled sandals Colour: black , men's/women's Chinese Laundry Penny Sandal Sandals Win highly appreciated , Adidas Oxitaly SONIA - Classic heels - neroAdidas New Balance WL574 - Trainers - whiteBelstaff Boots - Men Belstaff Boots online on YOOX United Kingdom - 11397476IG , Doucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11512093DV , Madden by Steve Madden OMNEY - Smart slip-ons - blackArmani Collezioni Sneakers - Men Armani Collezioni Sneakers online on YOOX United Kingdom - 11221059JPSaint Laurent Sneakers - Men Saint Laurent Sneakers online on YOOX United Kingdom - 11401770LXLea-Gu Boots - Women Lea-Gu Boots online on YOOX United Kingdom - 11525246HJKenzo Sneakers - Women Kenzo Sneakers online on YOOX United Kingdom - 11414879MP , Carrano Sandals - Women Carrano Sandals online on YOOX United Kingdom - 11268476NG , Carrano Sandals - Women Carrano Sandals online on YOOX United Kingdom - 11416475JIHogan Ballet Flats - Women Hogan Ballet Flats online on YOOX United Kingdom - 11168710AUIoannis Flip Flops - Women Ioannis Flip Flops online on YOOX United Kingdom - 11318489RUyx3XPOkh ASICS E561y-asics TRAINERS FOR WOMENNZ3rXQov SKECHERS S012100709btx ZAPATILLA CON PLATAFORMAlady Nike Red and Black Sneakers Most economical , MISS Banana Republic Black Karmine Sandals uppers
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.