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.Sam Edelman Ankle Boot - Women Sam Edelman Ankle Boots online on YOOX United Kingdom - 11468110CLDonald J. Pliner Taupe Designer Sandalswoman Guess Tan Wedges official website , Twin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11048780IVRoberto Della Croce Ankle Boot - Women Roberto Della Croce Ankle Boots online on YOOX United Kingdom - 11268276ILRIVIERABONUCCI Salon Fiesta Peeptoe Mujer Piel Ja3027b13-plata SHOES FOR WOMEN , WOMENS Tory Burch Black Mignon Sandals Not so expensive , woman Christian Louboutin Mettalic Yolanda Platforms price concessionsFRANCESCO MILANO R34-francesco Milano ZAPATILLA CON PLATAFORMAWOMEN Moschino Black Sandals Sale online store , man/woman ALDO Bonville Oxfords Popular tide shoesReplay MAXWELL - Cowboy/Biker boots Colour: black , BOBS from SKECHERS Bobs Clique - Fierce , Adidas CAFèNOIR Trainers - neroDune London GLORYA - Slip-onsmen/women Quiksilver Spar Sneakers & Athletic Quiksilver Modern designShoe The Bear JUNO STUDS - Slip-ons Colour: black , PS by Paul Smith YUKI - Trainers Colour: whitemen/women Yellow Box Tessie Sandals List of explosionsmen/women Taos Footwear Guest Star Sneakers & Athletic Taos Footwear reliable quality , men's/women's PUMA Ignite evoKNIT Lo 2 Sneakers & Athletic PUMA Great choice , Men/Women Donald J Pliner Dan Sneakers & Athletic Donald J Pliner elegant , Nike Performance FREE TRAINER V8 - Sports shoes - black/white/red blaze , Fornarina Sneakers - Women Fornarina Sneakers online on YOOX United Kingdom - 11494437HO , Police 883 Loafers - Women Police 883 Loafers online on YOOX United Kingdom - 11478864WUWhat For Court - Women What For Courts online on YOOX United Kingdom - 11540921NB , Miu Miu Boots - Women Miu Miu Boots online on YOOX United Kingdom - 11015042BE , Jimmy Choo Sandals - Women Jimmy Choo Sandals online on YOOX United Kingdom - 11478450FP , Clergerie Salvy Lend a sophisticated shine to your ensemble with the Robert Clergerie Salvy Sneaker , Munro Yuma Add a fresh new element to your look with the Yuma heeled sandal ,
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.