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.( Verba ) Sneakers - Women ( Verba ) Sneakers online on YOOX United Kingdom - 11426427VFLiu ?Jo Shoes Sneakers - Women Liu ?Jo Shoes Sneakers online on YOOX United Kingdom - 11245090DF , Lola Cruz Ankle Boot - Women Lola Cruz Ankle Boots online on YOOX United Kingdom - 44989155EMChelsea Paris Open-Toe Mules - Women Chelsea Paris Open-Toe Mules online on YOOX United Kingdom - 11463583LI , Mcq Alexander Mcqueen Loafers - Women Mcq Alexander Mcqueen Loafers online on YOOX United Kingdom - 11354784HCMiu Miu Ankle Boot - Women Miu Miu Ankle Boots online on YOOX United Kingdom - 11148710CM , MEPHISTO Parcela WEDGE-HEEL SANDALS FOR WOMEN , WOMENS Metallic Leather Wedges Good design , Basket Platform Canvas Women's Sneakers | Blue Flower-Puma Silver , ANA CARLO B21-felipe Sirera SHOES FOR WOMENWOMEN Christian Louboutin Black Cataclou Wedges Negotiate , men's/women's Hispanitas Venecia Boots New in stock , mens/womens LAUREN Ralph Lauren Aleigh Heels cheaper , man/woman M4D3 Cozy Flats Wear resistantAlberto Zago Ankle boots Colour: bluAdidas POPA ARRECIFE - Platform sandals - silver/blackSantoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11336045XG , adidas Performance POWER PERFECT III - Sports shoes - black/white/goldRoberto Botticelli Loafers - Men Roberto Botticelli Loafers online on YOOX United Kingdom - 11512689LU , Alberto Guardiani Loafers - Men Alberto Guardiani Loafers online on YOOX United Kingdom - 11358692VFGiuseppe Zanotti Sneakers - Men Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11310806FE , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11479668NXSensi Sandals - Women Sensi Sandals online on YOOX United Kingdom - 11577181VGGiuseppe Zanotti Boots - Women Giuseppe Zanotti Boots online on YOOX United Kingdom - 11454378GGChie Mihara Loafers - Women Chie Mihara Loafers online on YOOX United Kingdom - 11239618GBFormentini Ankle Boot - Women Formentini Ankle Boots online on YOOX United Kingdom - 11478903XA , Moma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11508437QGN° 21 Sneakers - Women N° 21 Sneakers online on YOOX United Kingdom - 11445498IF , women Tod's High Heels Sandals Platforms Strong heat and wear resistance , ladies Burberry Signature Slides Sandals Win highly appreciated ,
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.