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.Miista Carlota - Ankle Boot - Women Miista Ankle Boots online on YOOX United Kingdom - 11566806BG , Citta' Di Milano Boots - Men Citta' Di Milano Boots online on YOOX United Kingdom - 11484979FCCinzia Araia Sneakers - Women Cinzia Araia Sneakers online on YOOX United Kingdom - 11502805FW , Manoush Ankle Boot - Women Manoush Ankle Boots online on YOOX United Kingdom - 11490340VJLADY Casadei Brown Platforms Long-term reputation , Dr Martens JOYCE HRT BlackLADY Christian Louboutin Black Tiburon Sandals Very good color , WOMENS Light Gray/White St. Tropez Sandals Nice appearancemen/women Kork-Ease Charissa Heels Carefully selected materials , men/women Report Zasha Sandals Online Shopping , Adidas Pretty Ballerinas CROSTINA - Ankle boots - marmottaConverse Chuck Taylor? All Star? Ox - Washed LinenPrimabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11332614WQPuma Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11218750BCBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11141737UVTod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11354257BLmens/womens Fred Perry Kingston Scotchgrain Leather Sneakers & Athletic Fred Perry Most practical , Damy Ankle Boot - Women Damy Ankle Boots online on YOOX United Kingdom - 11452549OGDiadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11508400BADolce&Gabbana Gold Knot Peep Toe Sandals , ladies Børn Olive Green Wedges durable , Attractive and durable Havaianas Conservation International Flip-Flops , reliable quality Toni Pons Mysen-FeGood design L.K. Bennett Flossieclassic style Franco Sarto L-Newton , New Listing Anne Klein OaliseJoie Bannerly Try on the stunningly simple yet chic look of the Joie Bannerly sandal! , WOMEN Stuart Weitzman Nude Linedrive Sandals For saleBruno Magli Beige Sling Back Low Sandals , Alexander Wang Black Silver Stud Slide 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.