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.Le Qarant Ankle Boot - Women Le Qarant Ankle Boots online on YOOX United Kingdom - 11501170AO , Sara López Ankle Boot - Women Sara López Ankle Boots online on YOOX United Kingdom - 11545920OC , Nike Classic Cortez Leather - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11050681RD , Cult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11474704USSKECHERS 49359 LOW-TOP TRAINERS FOR WOMEN , wwKaJBN4 mens/womens VOLATILE Primm Heels durabilityJolie By Edward Spiers Open-Toe Mules - Women Jolie By Edward Spiers Open-Toe Mules online on YOOX United Kingdom - 11548464BNMarc Ellis Ankle Boot - Women Marc Ellis Ankle Boots online on YOOX United Kingdom - 11455778ADLADY Steve Madden Beish Ropper Wedges Strong heat and heat resistancelady Valentino Black Rockstud Pump Platforms King of the quantityYOKONO Tilsa 001 Negro FASHION ANKLE BOOTS FOR WOMENMen/Women David Tate Natalie Boots Breathable shoesman/woman ALDO Alicya Heels Global sales , men's/women's Dolce Vita Harvyy Heels auctionAdidas Men's Tour 360 2.0 ShoesConverse | Converse Chuck Taylor '70 Sneakers In Blue 160523CAdidas Nike Sportswear INTERNATIONALIST - Trainers - med olive/whiteMascaró Loafers - Women Mascaró Loafers online on YOOX United Kingdom - 11510987TDBrett & Sons PLYM II - Classic ankle boots - cognacMadden by Steve Madden GRASP - Classic ankle boots - cognacmen/women ASICS Gel-Fit Sana 3 Sneakers & Athletic ASICS Global salesman/woman Camper Twins - K200606 Loafers High quality and cheapBruno Bordese Loafers - Men Bruno Bordese Loafers online on YOOX United Kingdom - 11289822WCPollini Court - Women Pollini Courts online on YOOX United Kingdom - 11472528UIElisabetta Franchi Court - Women Elisabetta Franchi Courts online on YOOX United Kingdom - 11544790FR , Tsd12 Ankle Boot - Women Tsd12 Ankle Boots online on YOOX United Kingdom - 11211356TORoper Clearcut The Roper Clearcut shoe is the ideal choice to keep you in style and comfortable all day long.woman Sam Edelman Beige Platforms Highly appreciated and widely trusted in and outwomen Rose 839608-601 Sneakers Highly praised and appreciated by the audience of consumers , FitFlop Taupe Bon Ii Back Strap Sandals ,
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.