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.Scee By Twin-Set Sandals - Women Scee By Twin-Set Sandals online on YOOX United Kingdom - 11291695QH , Ruco Line Ankle Boot - Women Ruco Line Ankle Boots online on YOOX United Kingdom - 11469273PJPaola Parisi Sneakers - Women Paola Parisi Sneakers online on YOOX United Kingdom - 11126318SVFootJoy Empower Spikeless (Little Kid/Big Kid) , women Enzo Angiolini Silver Platforms Elegant , J|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11517080BOOvye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11564838SAOpen Closed Shoes Boots - Men Open Closed Shoes Boots online on YOOX United Kingdom - 11569738EF , Ted Baker LUOCIA - Trainers Colour: navy , Unisa TOLA - Classic heelsCole Haan Willliams Welt Chukka II , Men/Women Free People Pressley Wrap Flat Flats Reliable performanceONLY SHOES ONLEVA STRAP - Sandals Colour: light pinkman/woman Rieker 74234 Paris 34 Boots Customer first , H by Hudson | H By Hudson Alloa Leather Loafers In Cognac , men's/women's Ryka Vida RZX 2 Sneakers & Athletic Ryka Fine art , men/women Superga 2790 Acotw Platform Sneaker Sneakers & Athletic Superga High-qualityLacoste | Lacoste Graduate 318 white leather sneakers with green trimmen/women G.H. Bass & Co. Walker Boat G.H. Bass & Co. Skilled manufacturing , Geox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11453364QW , Andìa Fora Sneakers - Women Andìa Fora Sneakers online on YOOX United Kingdom - 11530777HHLe Silla Court - Women Le Silla Courts online on YOOX United Kingdom - 11174558NT , Casadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11543949BBDsquared2 Flip Flops - Women Dsquared2 Flip Flops online on YOOX United Kingdom - 11132660BIMarco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11515949DT , Sigerson Morrison Court - Women Sigerson Morrison Courts online on YOOX United Kingdom - 11452748OE , WOMENS Prada Slides Platforms Cheap idealKing of the crowd New Balance WX857v2At an affordable price Tommy Bahama Tasslington , Women's Tory Burch Leopard Sophie Wedges Good worldwide reputation ,
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.