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.Vans Sk8-Hi Reissue - Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11108142DSNatan Ankle Boot - Women Natan Ankle Boots online on YOOX United Kingdom - 11502206THCult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11500898MF , Moon Boot W.E. Monaco Low Wp - Boots - Women Moon Boot Boots online on YOOX United Kingdom - 11333274VP , MTNG 93930 C22145 Spring Negro BOTíN PLANO DE MUJER , Fendi Beige 8k3716gcc Perforated Leather Low Eur 37 Pumps , WOMEN Tory Burch Tan Bailey Wedges Excellent value , Keen Presidio II Waterproof Mid Zip Boot , Men/Women BUGATCHI Lucca Loafers excellent quality , man/woman Ivanka Trump Freeda 2 Boots Selected materialsGeneve Sneakers - Women Geneve Sneakers online on YOOX United Kingdom - 11470316PW , Lotto T-TOUR 600 XI - Outdoor tennis shoes - white/bluemen's/women's Donald J Pliner Amalia Heels Don't worry when shopping , Bikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 11326197VNFornarina Sandals - Women Fornarina Sandals online on YOOX United Kingdom - 44971457SNSebastian Court - Women Sebastian Courts online on YOOX United Kingdom - 11445741RLBelstaff Boots - Women Belstaff Boots online on YOOX United Kingdom - 11540522KC , Tsd12 Sneakers - Women Tsd12 Sneakers online on YOOX United Kingdom - 11567430UMLogan Ankle Boot - Women Logan Ankle Boots online on YOOX United Kingdom - 11557335NRBalmain Ankle Boot - Women Balmain Ankle Boots online on YOOX United Kingdom - 11491192KVGuido Sgariglia Sneakers - Women Guido Sgariglia Sneakers online on YOOX United Kingdom - 11407074EBVic Ballet Flats - Women Vic Ballet Flats online on YOOX United Kingdom - 11548529SH , Chiarini Bologna Sneakers - Women Chiarini Bologna Sneakers online on YOOX United Kingdom - 11190929RSSergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11248336GL9GrFkvaS Under Armour UA Torch LowReasonable price Clarks Maritsa LaraNaot Bluegill The Bluegill is part of the Naot Shell Collection which runs as a Medium to Wide Width.Acne Studios Light Grey Men's Broadway Zip Sneakers , womens Blue Flat Sandals Very good color , Christian Louboutin Taupe Pik Pik Sneakers
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.