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.Roberto Della Croce Boots - Men Roberto Della Croce Boots online on YOOX United Kingdom - 11529918MHAlexander Smith Sneakers - Women Alexander Smith Sneakers online on YOOX United Kingdom - 11390433VG , Bates Footwear Seige 8 Side Zip , SKECHERS Work Sudler - Mabscott SR , REEBOK Cn-0963 LOW-TOP TRAINERS FOR WOMEN , Liu •Jo Shoes Sandals - Women Liu •Jo Shoes Sandals online on YOOX United Kingdom - 11294242GP , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11336136OHE8 By Miista Adeline - Sandals - Women E8 By Miista Sandals online on YOOX United Kingdom - 11469756GT , Golden Goose Deluxe Brand Red White and Blue Sneakers , GIOSEPPO 45148 FASHION ANKLE BOOTS FOR WOMENman/woman PLDM Gaya FRL Heels Speed ??refundMen/Women DSQUARED2 Studded Sandal Sandals Great varietyUnder Armour UA Threadborne Push TR , Balenciaga Court - Women Balenciaga Courts online on YOOX United Kingdom - 11520797EQZolfo Loafers - Men Zolfo Loafers online on YOOX United Kingdom - 11417019XX , New Look Wide Fit WIDE FIT JAMES - Slip-ons Colour: oatmealman/woman Sam Edelman Lulie Heels Elegant and sturdy set meal , men's/women's Patrizia Pepe Trainers Let our products go to the world , Keb Sandals - Women Keb Sandals online on YOOX United Kingdom - 11475464EOSpringa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11574480WQ , Status Ankle Boot - Women Status Ankle Boots online on YOOX United Kingdom - 11548286MM , Vivienne Westwood Court - Women Vivienne Westwood Courts online on YOOX United Kingdom - 11521117DJ , Giorgio Fabiani Loafers - Women Giorgio Fabiani Loafers online on YOOX United Kingdom - 11568314DB2ZotSVia Lacoste Carnaby Evo 318 7kkGq8sxf Irish Setter Crosby 6" Waterproof , Economical and practical Dr. Scholl's Patch , women BCBGeneration Black Ellis Platform Sandals First group of customersWomen's Nike Grey 642199-004 Sneakers At an affordable priceDolce&Gabbana Brown Dolce & Gabana Slingback Heels SandalsLadies Sergio Rossi Pelle Royal Sandals Aesthetic appearance ,
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.