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.Giorgio Brato Ankle Boot - Women Giorgio Brato Ankle Boots online on YOOX United Kingdom - 11458486FEFrancesca Conoci Loafers - Women Francesca Conoci Loafers online on YOOX United Kingdom - 11507123NPTod's Ballet Flats - Women Tod's Ballet Flats online on YOOX United Kingdom - 11087508SN , Silvia Rossini Court - Women Silvia Rossini Courts online on YOOX United Kingdom - 11502988NB , Marco De Vincenzo Ankle Boot - Women Marco De Vincenzo Ankle Boots online on YOOX United Kingdom - 11489182KRMoa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11460283HC , WOMEN bebe Brown Wedges High quality and low effortwomens Manolo Blahnik White Crocodile Sandals Different productsladies Tory Burch Baige Formal Shoes Fashionmen's/women's VIONIC Valeri Loafers Elegant and solemn , mens/womens LifeStride Ivy Loafers Crazy price , mens/womens BCBGeneration Lara Boots Strong valueCrocs Swiftwater Kryptek Neptune Deck FlipAdidas Dockers by Gerli High-top trainers - ice , men/women Bogs Rio Sandal Sandals Crazy price, Birmingham , Migliore Loafers - Men Migliore Loafers online on YOOX United Kingdom - 11578101RF , Tod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11542677DIAdidas Reebok Classic CL LTHR PM - Trainers - pale pink/shell pink , men/women Bullboxer Trainers Colour: marron brown/black Known for its excellent quality , Adidas Felmini CLASH - Classic ankle boots - zenia tobaccomen/women SKECHERS D'Lite Ultra Sneakers & Athletic SKECHERS Excellent function , O.X.S. Ankle Boot - Women O.X.S. Ankle Boots online on YOOX United Kingdom - 11546655SQGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11056915UV , Miu Miu Court - Women Miu Miu Courts online on YOOX United Kingdom - 11490419UDAlexander Smith Loafers - Men Alexander Smith Loafers online on YOOX United Kingdom - 11088326IX , 4hWjMD4v BRUNATE 31587 SHOES FOR WOMEN , Complete specifications Easy Spirit AP1 , the most economical Vince Camuto Elvinwoman Jessica Simpson Platforms Win the praise of customersAcne Studios Black Calf-hair Cleo Sneakers 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.