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.Via Roma 15 Sandals - Women Via Roma 15 Sandals online on YOOX United Kingdom - 11563129VHAncient Greek Sandals Sandals - Women Ancient Greek Sandals Sandals online on YOOX United Kingdom - 11524472KD , Divine Follie Ankle Boot - Women Divine Follie Ankle Boots online on YOOX United Kingdom - 11562783QF , Shv7hFRR men's/women's Seychelles Zeal Heels Bargain , TSUGI Apex Sneakers | Puma Black-Puma Blackmen's/women's Born Tagum Sandals Win highly appreciatedmen/women Reef Rover SL Sandals Online , John Varvatos Collection Varick Short ChelseaMelvin & Hamilton TONI - Slip-ons - blackMen/Women New Balance Classics WVL710v2 Boots Used in durabilitymens/womens Rieker 61566 Lotte 66 Sandals Exquisite (middle) workmanshipmen's/women's Rocket Dog Shelby Boots Economical and practical , man/woman Walking Cradles Anna Loafers Vintage tide shoes , men's/women's Sigerson Morrison Laddie Sandals Diverse new design , ASOS DESIGN | ASOS DESIGN Panama High HeelsAdidas Menbur High heeled sandals - ivory , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11467028DVDorothy Perkins Wide Fit SOPHIA - High heeled sandals Colour: ivoryVoile Blanche Sneakers - Men Voile Blanche Sneakers online on YOOX United Kingdom - 11580830DD , Twiggy Court - Women Twiggy Courts online on YOOX United Kingdom - 11473188WOSpringa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11456750KS , Lumberjack Sneakers - Women Lumberjack Sneakers online on YOOX United Kingdom - 11197923ATRoberto Botticelli Court - Women Roberto Botticelli Courts online on YOOX United Kingdom - 44631533VL , Tom Ford Sandals - Women Tom Ford Sandals online on YOOX United Kingdom - 11515058VXFiorentini+Baker Ankle Boot - Women Fiorentini+Baker Ankle Boots online on YOOX United Kingdom - 11499422QQValentino Pink Rockstud Leather Sandal Sneakers , Athletic Propulsion Labs Apl Sneakers Sneakers , Strong value J. Renee Melosa , LADY Gold With Rhinestone Flower Sandals Special promotions at the end of the year , women Fendi Brown Suede Platform Sandals Exquisite workmanship ,
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.