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.F.Lli Bruglia Ankle Boot - Women F.Lli Bruglia Ankle Boots online on YOOX United Kingdom - 11525506RN , Islo Isabella Lorusso Loafers - Women Islo Isabella Lorusso Loafers online on YOOX United Kingdom - 11544193PKCollection Privēe? Flip Flops - Women Collection Privēe? Flip Flops online on YOOX United Kingdom - 11329678QRIsabel Marant Étoile Sneakers - Women Isabel Marant Étoile Sneakers online on YOOX United Kingdom - 11345132QH , Osvaldo Rossi Sandals - Women Osvaldo Rossi Sandals online on YOOX United Kingdom - 11160661JMGONZALO 4313m THIGH BOOTS FOR WOMEN , Liu •Jo Shoes Sandals - Women Liu •Jo Shoes Sandals online on YOOX United Kingdom - 11338817HQ , Ladies Robert Clergerie Blue Dylanal Platforms Different stylesWOMEN Prada Navy Espadrilles Wedges Reasonable delivery and punctual deliveryAPLAUSO 82030 ZAPATO DE SALóN PARA MUJERStuart Weitzman Berry Suede Tiegirl Bingo SandalsLADY Jeffrey Campbell Cognac Romilly Wedges qualitymens/womens Sam Edelman Gates Sandals Special priceMorata wedge sandals , beige/gold-coloured, TamarisGioseppo Classic ankle boots Colour: plomoAdidas CTWLK DELTA - Ankle boots - naturalLiu Jo Jeans KARLIE - Trainers Colour: blue , Pollini Court - Women Pollini Courts online on YOOX United Kingdom - 11446894JCVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11492459WR , Ras Sandals - Women Ras Sandals online on YOOX United Kingdom - 11119877EV , Calpierre Court - Women Calpierre Courts online on YOOX United Kingdom - 11459138XX , Dorateymur Ankle Boot - Women Dorateymur Ankle Boots online on YOOX United Kingdom - 11453936KMPatrizia Pepe Sandals - Women Patrizia Pepe Sandals online on YOOX United Kingdom - 11523293GCSpringa Ankle Boot - Women Springa Ankle Boots online on YOOX United Kingdom - 11456762ESKaty Perry Sneakers - Women Katy Perry Sneakers online on YOOX United Kingdom - 11459428UB , Leather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11564096TLStuart Weitzman Court - Women Stuart Weitzman Courts online on YOOX United Kingdom - 11492253SO , Prada Sport Sneakers - Men Prada Sport Sneakers online on YOOX United Kingdom - 11495652IKBurberry Beige Nova Check Sneakers Sneakers , The first batch of customers' comprehensive specifications VANS Va38cbc4r-vans LOW-TOP TRAINERS ,
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.