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.Alexander Hotto Ankle Boot - Women Alexander Hotto Ankle Boots online on YOOX United Kingdom - 11486432APAnother Project Ankle Boot - Women Another Project Ankle Boots online on YOOX United Kingdom - 11448019RA , Kbr Shoes Ankle Boot - Women Kbr Shoes Ankle Boots online on YOOX United Kingdom - 11556715PVSaint Tropez Ballet Flats - Women Saint Tropez Ballet Flats online on YOOX United Kingdom - 11362850FS , Giuseppe Zanotti Flip Flops - Women Giuseppe Zanotti Flip Flops online on YOOX United Kingdom - 11312627AEHerve'® Crosta Nera - Boots - Men Herve'® Boots online on YOOX United Kingdom - 11538771LWNorma J.Baker Court - Women Norma J.Baker Courts online on YOOX United Kingdom - 11476955OW , CALIFERS Mocasines Mujer Piel Claudy Jg5246v90-negro ZAPATO DE CU?A PARA MUJERLINCE 74008 Marino FASHION BALLERINAS FOR WOMENMango NANTES - Classic ankle boots Colour: blackman/woman Dan Post Jules Boots Excellent functionmens/womens Me Too Nakira Sandals High-quality materials , Lacoste AVANCE - Trainers - white/offwhite , men's/women's Tommy Hilfiger Chipotl Sandals qualityAdidas Bianca Di Classic ankle boots - magenta lustroman/woman Andre FUSION - Trainers excellent quality , mens/womens s.Oliver Platform boots Clearance priceAdidas Clarks CALLA ASTER - Ankle boots - dark greyJfk Court - Women Jfk Courts online on YOOX United Kingdom - 11399060IK , Apologie Sneakers - Women Apologie Sneakers online on YOOX United Kingdom - 11431498PKPrimafila Sandals - Women Primafila Sandals online on YOOX United Kingdom - 11514391SE , Sara López Sneakers - Women Sara López Sneakers online on YOOX United Kingdom - 11475404LM , Roccobarocco Flip Flops - Women Roccobarocco Flip Flops online on YOOX United Kingdom - 11464207SW , Alberto Fermani Loafers - Women Alberto Fermani Loafers online on YOOX United Kingdom - 11539178HF , Heliā Ankle Boot - Women Heliā Ankle Boots online on YOOX United Kingdom - 11521772VM , p4jHP1XN WOMEN Maroon Fondo Platforms Excellent , lady Superga Black S003j40 Sneakers Online export business , women Stuart Weitzman Trail Mix Sandals High-quality materialsKeen Gray Dry Waterproof Hiking Trailing Sneakers , Vionic Black Crocodile Print Orthaheel Strappy 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.