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.Janet & Janet Sandals - Women Janet & Janet Sandals online on YOOX United Kingdom - 11398947USCarlo Pazolini Ankle Boot - Women Carlo Pazolini Ankle Boots online on YOOX United Kingdom - 11509982KL , Janet & Janet Ankle Boot - Women Janet & Janet Ankle Boots online on YOOX United Kingdom - 11493494NLPaul & Joe Sneakers - Women Paul & Joe Sneakers online on YOOX United Kingdom - 11289089HRXTI 53970 C Taupe FASHION FOOTWEAR FOR WOMEN , ladies Jimmy Choo Platform Formal Shoes Pleasant appearancewomen Burberry Brown Thong Leather Wedges Pleasant appearance , ROBERTO LEY 27 ZAPATO PLANO PARA MUJERLadies Converse Blac Chuck Sneakers New design , men/women Deer Stags Apprise Oxfords Price reduction , men/women J. Renee Rebeka Heels buyAdidas mint&berry Boots - blackDr. Scholl's Darcia - Original Collection , mens/womens ASICS GEL-Resolution? 6 Sneakers & Athletic ASICS excellentMen/Women Bruno Magli Trillo Loafers New in stock , Dama Boots - Men Dama Boots online on YOOX United Kingdom - 11513449ECMelvin & Hamilton Classic ankle boots - rio stone/mid blue/navy , mens/womens Body Glove Molokai Sneakers & Athletic Body Glove elegantAlexander Trend Sneakers - Men Alexander Trend Sneakers online on YOOX United Kingdom - 11512245DXVersace Collection Boots - Men Versace Collection Boots online on YOOX United Kingdom - 11509148XLSergio Rossi Sneakers - Men Sergio Rossi Sneakers online on YOOX United Kingdom - 11526017EWFlorence Court - Women Florence Courts online on YOOX United Kingdom - 11527161SX , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11577719OORockport Sneakers - Women Rockport Sneakers online on YOOX United Kingdom - 11511622MV , Jucca Ankle Boot - Women Jucca Ankle Boots online on YOOX United Kingdom - 11289578XQMoschino Flip Flops - Women Moschino Flip Flops online on YOOX United Kingdom - 11462355AQMarsèll Open-Toe Mules - Women Marsèll Open-Toe Mules online on YOOX United Kingdom - 11551583WN , Public Desire Sandals - Women Public Desire Sandals online on YOOX United Kingdom - 11483946NSUnder Armour Sneakers - Men Under Armour Sneakers online on YOOX United Kingdom - 11579435HTModerate price Donald J Pliner Valerico ,
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.