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 - 44783745GGVoile Blanche Ankle Boot - Women Voile Blanche Ankle Boots online on YOOX United Kingdom - 11580970PBCristina Millotti Court - Women Cristina Millotti Courts online on YOOX United Kingdom - 11458051HR , Cristina Millotti Loafers - Women Cristina Millotti Loafers online on YOOX United Kingdom - 11457757TAPrada Black 2 Inch Heel SandalsGeorge J. Love Ankle Boot - Women George J. Love Ankle Boots online on YOOX United Kingdom - 11541718OLlady Stuart Weitzman Gold Hurdle Wedges Make full use of materials , men's/women's Naturalizer Aileen Heels Practical and economical , men's/women's CHLOE GOSSELIN Lobelia Boots Preferred boutiqueMen/Women Naya Crescent Sandals Moderate costmen's/women's Katy Perry The Crush Sandals Diverse new design , Melvin & Hamilton Sandals Colour: classic dark brown/modica white/blue , men/women Bettye Muller Nightcap Boots Tide shoes list , Eytys Sneakers - Women Eytys Sneakers online on YOOX United Kingdom - 11283059RP , Lemargo Boots - Men Lemargo Boots online on YOOX United Kingdom - 11533068SSNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11278881SCAdidas Lauren Ralph Lauren SUPER SOFT DAYNA - Sandals - black , mens/womens Palladium Pampa Cuff WP Lux Boots In short supplyRoberto Cavalli Boots - Men Roberto Cavalli Boots online on YOOX United Kingdom - 11577143CLAlexander Smith Sneakers - Men Alexander Smith Sneakers online on YOOX United Kingdom - 11483875ML , O.X.S. Sneakers - Women O.X.S. Sneakers online on YOOX United Kingdom - 11511773AJDsquared2 Court - Women Dsquared2 Courts online on YOOX United Kingdom - 11567889RMMsgm Open-Toe Mules - Women Msgm Open-Toe Mules online on YOOX United Kingdom - 11168825MKPaul Andrew Sandals - Women Paul Andrew Sandals online on YOOX United Kingdom - 11402862AK , GFhdsiHe Camper Peu Cami - K400350 , Personalization trend SAS Tour MeshJerome C. Rousseau Black New Ankle Strap Leather Feather Sandals , WOMEN Puma Black/White Carson Runner Sneakers Consumers firstLADY Manolo Blahnik Transparent Sandals Various current designs , Jimmy Choo Coral Leather Strappy Sandals/Heels 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.