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.Jimmy Choo Fuschia Rafia Mule SandalsAVID Fight or Flight Sneakers | Puma Black-Puma Black | PUMA Street Running | PUMA United States , Adidas Originals Eqt Racing Adv W - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11334650BA , MTNG 69158 C40118 Nude LOW-TOP TRAINERS FOR WOMEN , ladies Tory Burch Camel Sandal Wedges Good design , LADY Tory Burch Blue Bamford Sneakers Special Priceman/woman Seychelles Waypoint Boots Rich on-time delivery , Anna Field Platform heels Colour: black , PUMA Puma Breaker Knit Carnval Fm , mens/womens Rocket Dog Lago Sandals Fashion versatile shoes , Castañer Sandals - Women Castañer Sandals online on YOOX United Kingdom - 11522565VH , Belsire Sneakers - Men Belsire Sneakers online on YOOX United Kingdom - 11338633VWAigle Boots - Men Aigle Boots online on YOOX United Kingdom - 11476579VVBrawn's Boots - Men Brawn's Boots online on YOOX United Kingdom - 11527256FNRegain Loafers - Men Regain Loafers online on YOOX United Kingdom - 11516391PR , Gioseppo Loafers - Men Gioseppo Loafers online on YOOX United Kingdom - 11549578IDBarracuda Boots - Men Barracuda Boots online on YOOX United Kingdom - 11531602LBAdidas Dune London MARELLDA - High heeled sandals - taupeLumberjack Sneakers - Women Lumberjack Sneakers online on YOOX United Kingdom - 11441546NB , Virginia Lisi Court - Women Virginia Lisi Courts online on YOOX United Kingdom - 11539495GBUnisa Ballet Flats - Women Unisa Ballet Flats online on YOOX United Kingdom - 11364976VQ , Bibi Lou Espadrilles - Women Bibi Lou Espadrilles online on YOOX United Kingdom - 11102592FH , Ebarrito Ballet Flats - Women Ebarrito Ballet Flats online on YOOX United Kingdom - 11372250QVAsh Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11483450NN , Jeffrey Campbell Loafers - Women Jeffrey Campbell Loafers online on YOOX United Kingdom - 11467090BRJil Sander Court - Women Jil Sander Courts online on YOOX United Kingdom - 11463869EC , EEjtowpY STROVER 18451 SHOES FOR WOMEN , 2XMcFKhQ WOMEN Dansko Sand Wedges Germany , Sophia Webster Multicolor Leather and Glitter Riko High Top Sneakers Sneakers , WOMENS SCHUTZ Cream Salto Alto Sandals diversity ,
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.