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.Rodo Ballet Flats - Women Rodo Ballet Flats online on YOOX United Kingdom - 11465546IF , Ladies Black Formal Shoes clearance sale , Joshua Sanders Sparkling Indigo White Soles New In Box Sneakers SneakersWomen's Bucco Brown Woven Sandal Wedges Known for its beautiful quality , PONS QUINTANA 6772 WEDGE-HEEL SANDALS FOR WOMENLADY Tory Burch White/Brown Sandals Elegant style , MISS White/ Black Darrylynn Sandals retail pricemen's/women's Stuart Weitzman Altman Boots Immediate deliverymens/womens Steve Madden Krieg Loafers International choicemen's/women's GUESS Norine Boots Maintenance capabilityWALK LONDON | WALK London Ben loafers in navy suedemens/womens Roper Spot On Boots Elegant and stable packagingmen's/women's Nine West Yvette 3 Flats product qualityman/woman Shellys London Fletcher boot Boots Wear resistantSaucony CLARION - Neutral running shoes Colour: blackASOS DESIGN | ASOS DESIGN Casual Shoes In Gray Suede With Natural SoleMOA - Master of Arts DISNEY - Classic heels Colour: black/red , Mizuno THUNDER BLADE - Volleyball shoes Colour: ombre blue/safety yellow/hawaiian ocean , Android Homme Sneakers - Men Android Homme Sneakers online on YOOX United Kingdom - 11423304XE , man/woman New Balance Arishi Sport v1 Sneakers & Athletic New Balance Easy lifeEglantine Boots - Women Eglantine Boots online on YOOX United Kingdom - 11507852IAGeox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11540425DE , Pelledoca Ankle Boot - Women Pelledoca Ankle Boots online on YOOX United Kingdom - 11515795LHVoile Blanche Sandals - Women Voile Blanche Sandals online on YOOX United Kingdom - 11027627JQEbarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11552049EF , Suky Open-Toe Mules - Women Suky Open-Toe Mules online on YOOX United Kingdom - 11506867RG , Charlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11500031LQ , Alegria Dani Go from day to night with long-lasting comfort in the dependable DaniMagnanni Mastoro Whether you're enjoying a leisure day or dressing for work, the Mastoro loafer will be the perfect addition to your ensemblewoman BCBGMAXAZRIA Gold Platforms At a lower price ,
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.