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.Helmut Lang Flip Flops - Women Helmut Lang Flip Flops online on YOOX United Kingdom - 11579700TO , Botticelli Limited Boots - Women Botticelli Limited Boots online on YOOX United Kingdom - 11453738NQSperry Striper II Twin Gore IndigoItalian Shoemakers Black Beaded Wedge SandalsNike Air Force 1 Lo - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11571065LVNike Air Max 1 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11442157WFSalvatore Ferragamo Off White Platform with Classy Clasp Sandals , DUDE Ollie White D120590100 LOW-TOP TRAINERS FOR WOMEN , Under Armour UA Valsetz RTS Side Zipmen/women Naot Levanto Boots Order welcome , men's/women's LifeStride Aida Loafers Selected materialsman/woman Donald J Pliner Lark Boots Modern and elegantA.S.98 POLARI - Ankle cuff sandals Colour: neroQuattrobarradodici Sneakers - Men Quattrobarradodici Sneakers online on YOOX United Kingdom - 11459014WRPony Sneakers - Men Pony Sneakers online on YOOX United Kingdom - 11583789XOSupra Sneakers - Men Supra Sneakers online on YOOX United Kingdom - 11476244GW , Lanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11404782DT , ASICS GEL-SONOMA 3 G-TX - Trail running shoes - black/onyx/carbonAdidas Converse CHUCK TAYLOR ALL STAR LIFT - Trainers - dark stucco/driftwood/whiteValleverde Sneakers - Women Valleverde Sneakers online on YOOX United Kingdom - 11547359AG , Fiorangelo Ankle Boot - Women Fiorangelo Ankle Boots online on YOOX United Kingdom - 11510606PUBianca Di Loafers - Women Bianca Di Loafers online on YOOX United Kingdom - 11572113SP , Philippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11571979LLDonald J. Pliner Black Model Sandalswomen Black Zeira Comfort Wedges promotion , 9FiEFFEB BELSTAFF Attwell Burnished Suede BootLxOV55as Fred Perry Spencer Premium LeatherStuart Weitzman Black Leather Lowlight Supple Kid Women's Low Heel Wedge SandalsValentino Ivory Rockstud Metal / 37.5 Pumps , ladies Black Wedge Thongs Sandals Superior quality ,
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.