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.Pas De Rouge Court - Women Pas De Rouge Courts online on YOOX United Kingdom - 11052798TR , Gia Couture Ankle Boot - Women Gia Couture Ankle Boots online on YOOX United Kingdom - 11472594DWCult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11504038VKTsd12 Ankle Boot - Women Tsd12 Ankle Boots online on YOOX United Kingdom - 11456288CDVans UA AUTHENTIC Multicoloured / Printed / PopHalston Heritage Ankle Boot - Women Halston Heritage Ankle Boots online on YOOX United Kingdom - 11475935BH , Women's Kurt Geiger London Tan Wedges Known for its excellent quality , Women's Salvatore Ferragamo White Sandals Make full use of materials , women Valentino Beige Espadrille Sandals Wedges price concessions , MISS Tod's Blue Sandal Platforms Diverse new designLadies Dolce&Gabbana Men’s Dressing Formal Shoes wear-resistant , Men/Women La Canadienne Dawn Boots Official website , mens/womens Eric Michael Anna Sandals Rich designMen/Women Brighton Lorin Heels New product , Patent leather heels , nude, CastalunaParadox London Pink CONCHITA - Bridal shoes Colour: ivory , Vans | Vans Authentic plimsolls in black VEE3BLKAdidas Unisa RITA - Clogs - white , Diesel Sneakers - Men Diesel Sneakers online on YOOX United Kingdom - 11490797MV , Red(V) Espadrilles - Women Red(V) Espadrilles online on YOOX United Kingdom - 11401212TNZinda Boots - Women Zinda Boots online on YOOX United Kingdom - 11338535LHLoriblu Boots - Women Loriblu Boots online on YOOX United Kingdom - 11560464DGPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11478469JIGiuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11185941PLAquazzura Ankle Boot - Women Aquazzura Ankle Boots online on YOOX United Kingdom - 11417154LM , Cost-effective Sanuk Yoga Joy FunkHuman border Easy Spirit AileneChristian Louboutin Burgundy Roller Boat Orthodoxe Spike Patent Sneaker Flat 41 SneakersNike Loden (Army Green Like) Juvenate 862236-300 Darl SneakersMISS Vince Camuto Black Browynn Platforms Elegant and solemn ,
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.