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.Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11050313UP , Nr Rapisardi Ankle Boot - Women Nr Rapisardi Ankle Boots online on YOOX United Kingdom - 11504889FPMaison Shoeshibar Aya - Sandals - Women Maison Shoeshibar Sandals online on YOOX United Kingdom - 11476706NIIsabel Marant Étoile Sandals - Women Isabel Marant Étoile Sandals online on YOOX United Kingdom - 11235952RFHerman & Sons Loafers - Men Herman & Sons Loafers online on YOOX United Kingdom - 11466002TASaucony Shadow Original - Sneakers - Men Saucony Sneakers online on YOOX United Kingdom - 11545206FARag & Bone Ankle Boot - Women Rag & Bone Ankle Boots online on YOOX United Kingdom - 11513758UL , ladies Tory Burch Navy Marguarite Sandals The highest quality materialwomen Nike Gray Pink Blue Sneakers New design , Dallas leather ankle boots , black, Mjus , men's/women's Geox WLOLA2FIT2 Flats Authentic guarantee , mens/womens Louise et Cie Alwick Flats Crazy price, Birmingham , Kenneth Cole New York LEX - Sandals Colour: red/multicolorman/woman Adidas Samba Og Shoes Schuhe Fashion dynamicmen's/women's Vagabond BECKY - Mules Clearance , Adidas TOM TAILOR Platform boots - navyDiesel Sneakers - Men Diesel Sneakers online on YOOX United Kingdom - 11491336QGStrategia Court - Women Strategia Courts online on YOOX United Kingdom - 11369703MT , Pinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11434163HWNike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11571618GFTory Burch Sandals - Women Tory Burch Sandals online on YOOX United Kingdom - 11403524DDLe Babe Court - Women Le Babe Courts online on YOOX United Kingdom - 11483772KC , Premiata Ankle Boot - Women Premiata Ankle Boots online on YOOX United Kingdom - 11530746CJElaine Turner Gold Demi Lizard Sandals , fqCeFNOZ STROVER 40501 SHOES FOR WOMENEconomical and practical Durango Rebel 11" Western , womens Buscemi Black Sneakers 100mm Sneakers Perfect workmanship , women Miu Miu Brown Wood Sandals selling price , ladies Forever 21 Pink Sandal Wedges Wholesale , women L.K. Bennett Sally Platforms German Outlets
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.