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.Jeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11467180KR , Spaziomoda Ankle Boot - Women Spaziomoda Ankle Boots online on YOOX United Kingdom - 11341896SLEbarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11537659BJ , Damy Ankle Boot - Women Damy Ankle Boots online on YOOX United Kingdom - 11501690VV , cNQb6yIf men/women Geox WSOZY8 Sandals business4uxfJciY men/women Caparros Gazelle Heels SimpleDolce & Gabbana Ankle Boot - Women Dolce & Gabbana Ankle Boots online on YOOX United Kingdom - 11463613BPladies Christian Louboutin Gold Volpi Platforms shopping onlineWomen's adidas Talc Nmd Sneakers Big clearance sale , BUGATTI 52900-pl ZAPATO DE SALóN PARA MUJERWhite Mountaineering ADIDAS TERREX TWO - TrainersConverse Chuck Taylor? All Star Mono Canvas Himen's/women's Trask Madison Waterproof Boots Pleasant appearance , Converse Chuck Taylor All Star - Mono Plush Suede Ox , Calvin Klein Jeans DIAHNE - Platform boots Colour: blackAdidas KIOMI Ankle boots - dark blueExibit Sneakers - Men Exibit Sneakers online on YOOX United Kingdom - 11464947XWL'f Shoes Loafers - Men L'f Shoes Loafers online on YOOX United Kingdom - 11481509JWPierre Hardy Sneakers - Men Pierre Hardy Sneakers online on YOOX United Kingdom - 11494561BMKallistè Court - Women Kallistè Courts online on YOOX United Kingdom - 11467438GM , Prada Sandals - Women Prada Sandals online on YOOX United Kingdom - 11150478QSCarmens Ankle Boot - Women Carmens Ankle Boots online on YOOX United Kingdom - 11525025BA , Vicini Tapeet Sandals - Women Vicini Tapeet Sandals online on YOOX United Kingdom - 11394752FSMoma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11479287ENCarefully selected materials Keds Kickstart Speckled Canvas , value ASICS Noosa FF 2renewed on time Vans Authentic Platform 2.0Cordani Essence Complement your favorite summer styles with these tailored Cordani™ Essence wedgesMISS Ulla Johnson Rose Ingrid Sandals Let our products go out into the worldBandolino Cobalt Blue Patent Leather with Cork Wedge Heel New Shoes/Designer 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.