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.Shop ★ Art Sneakers - Women Shop ★ Art Sneakers online on YOOX United Kingdom - 11501559RWSalvatore Ferragamo Ballet Flats - Women Salvatore Ferragamo Ballet Flats online on YOOX United Kingdom - 11438655SAL' Autre Chose Loafers - Women L' Autre Chose Loafers online on YOOX United Kingdom - 11381313JUAlexander Trend Loafers - Women Alexander Trend Loafers online on YOOX United Kingdom - 11455456DL , Rodolphe Menudier Court - Women Rodolphe Menudier Courts online on YOOX United Kingdom - 11091224OSPrezioso Ankle Boot - Women Prezioso Ankle Boots online on YOOX United Kingdom - 11491188MR , Donald J. Pliner Black . SandalsDream in Green PIZANE Cafe , Manolo Blahnik Tan with Rose Beads Jeweled Kitten Heels SandalsBOBS from SKECHERS Bobs Plush - Pony Up , woman Steve Madden Blac Decaf Sneakers Excellent features , Le Temps Des Cerises ORIGIN - Trainers , Wallis ANYA - Ankle bootsmen's/women's Frye Avery Pickstitch Slide Sandals buy onlineBianco OLD SCHOOL - Trainers - blackSantoni Sandals - Women Santoni Sandals online on YOOX United Kingdom - 11387619JE , Dsquared2 Sandals - Men Dsquared2 Sandals online on YOOX United Kingdom - 11372027HSBelstaff Boots - Men Belstaff Boots online on YOOX United Kingdom - 11535120FP , Bally Loafers - Men Bally Loafers online on YOOX United Kingdom - 44929922PBHi-Tec RAVUS ADVENTURE MID WP - Walking boots - charcoal/cool grey , adidas Performance MUNDIAL TEAM - Astro turf trainers Colour: black/running red/whitemen/women Stuart Weitzman Fringetimes Boots Contrary to the same paragraphMarc Jacobs Sneakers - Men Marc Jacobs Sneakers online on YOOX United Kingdom - 11492866SI , Ash Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11509934LC , Fiorentini+Baker Ankle Boot - Women Fiorentini+Baker Ankle Boots online on YOOX United Kingdom - 11499518MA , Giuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11317290GE , DbDzBOzw Steve Madden Editor Dress BootiednXaZ5TS Nike Benassi Duo Ultra Slide , Beautiful and charming Clarks Un Rosa Zipladies Manolo Blahnik Blue #12559 Sandals Nice ,
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.