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.Sartori Gold Ankle Boot - Women Sartori Gold Ankle Boots online on YOOX United Kingdom - 11472566JH , Robert Clergerie Ankle Boot - Women Robert Clergerie Ankle Boots online on YOOX United Kingdom - 11454130WC , Stella Mccartney Ankle Boot - Women Stella Mccartney Ankle Boots online on YOOX United Kingdom - 11448543LN , Maria Cristina Loafers - Women Maria Cristina Loafers online on YOOX United Kingdom - 11523395UF , PUMA x OUTLAW MOSCOW Trailfox Graphic Sneakers | Puma Black | PUMA PUMA x OUTLAW MOSCOW | PUMA United States , Vans Men's Sk8-Hi MTE Suede Trainers, Blue blue , Prada Black Suede Slip On Sneakers Sneakers , man/woman Trask Paige Loafers high qualityMJUS Classic ankle boots Colour: nero , The North Face Endurus Hike GTX?mens/womens Alegria Debra Professional Clogs & Mules discount , mens/womens Bogs Kristina Tall Boot Boots Maintenance capabilitymens/womens Donald J Pliner Siro Boots Reputation firstBelstaff TRIAL MASTER - Cowboy/Biker boots Colour: blackHummel MARATHONA SNOW BLIND - Trainers Colour: whiteSkechers Performance GO RUN 600 - Neutral running shoes - charcoalHenderson Loafers - Women Henderson Loafers online on YOOX United Kingdom - 11452322RB , Vic Boots - Women Vic Boots online on YOOX United Kingdom - 11256496RLMagrit Court - Women Magrit Courts online on YOOX United Kingdom - 11502353KQ , Dsquared2 Sandals - Women Dsquared2 Sandals online on YOOX United Kingdom - 11199289CC , Elisabetta Franchi Court - Women Elisabetta Franchi Courts online on YOOX United Kingdom - 44954490ISSettima Ankle Boot - Women Settima Ankle Boots online on YOOX United Kingdom - 11270699CF , Pura López Boots - Women Pura López Boots online on YOOX United Kingdom - 11274241LE , Marc Ellis Sandals - Women Marc Ellis Sandals online on YOOX United Kingdom - 11532279KCRas Ballet Flats - Women Ras Ballet Flats online on YOOX United Kingdom - 11214861XQ , zDvTElXS lady Blue Platforms Excellent craft , Let our goods go to the world New Balance MA900v1 Walkingladies Tory Burch Natural 51148206 Sandals Known for its excellent quality , Tory Burch Pink Fuchsia Croc Wedge Sandals , ladies Anne Klein Peep Wedges Full specification ,
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.