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.Shop ★ Art Sneakers - Women Shop ★ Art Sneakers online on YOOX United Kingdom - 11275099CLGianni Marra Ankle Boot - Women Gianni Marra Ankle Boots online on YOOX United Kingdom - 11512088IB , Giancarlo Paoli Court - Women Giancarlo Paoli Courts online on YOOX United Kingdom - 11500402JFJanet Sport Sneakers - Women Janet Sport Sneakers online on YOOX United Kingdom - 11507160AOCDOUX 7979 FASHION BOOTS FOR WOMEN , Joseph Cheaney & Sons Boots - Men Joseph Cheaney & Sons Boots online on YOOX United Kingdom - 11539841LBAlma En Pena. Sandals - Women Alma En Pena. Sandals online on YOOX United Kingdom - 11435828DGPeach with Era Doesn't Peach Pink Rhinestones Blinged Out Sneakers Sneakers , Prada Black Leather Strappy Embellished Open Toe Kitten Heels Sandalswomens Tory Burch Snake Skin Wedges Attractive and durable , WOMENS Valentino Brown Sandals Known for its beautiful quality , FLY LONDON Yulo FASHION BOOTS FOR WOMEN , womens Tory Burch Patti Wedges For sale , Kappa CHOSE HIGH - Sports shoes Colour: black/white , Lowa RENEGADE III GTX - Walking shoes , J.LINDEBERG GRAIN - Trainers From , man/woman Clarks Patty Tayna Clogs & Mules online salemen/women Soludos Platform Smoking Slipper Loafers Crazy price, Birmingham , Valleverde Loafers - Men Valleverde Loafers online on YOOX United Kingdom - 11552007GNVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11547170OOEleventy Loafers - Men Eleventy Loafers online on YOOX United Kingdom - 11467761FQ , man/woman Dolce Vita Nate Sneakers & Athletic Dolce Vita Personalization trendMen/Women Loeffler Randall Logan Sneakers & Athletic Loeffler Randall Louis, elaborateVersace Sandals - Women Versace Sandals online on YOOX United Kingdom - 11451870BI , Sergio Rossi Sandals - Women Sergio Rossi Sandals online on YOOX United Kingdom - 11285275EISchutz Ballet Flats - Women Schutz Ballet Flats online on YOOX United Kingdom - 11583470WJ , Not so expensive Vince Camuto Louden BootComplete specification Pikolinos Formentera W9S-1647 , Explosive good goods Spenco Yumi SandalTahari White Elie Vesuvio Mesh Fashion Sneakers White/Platino / 39 Eu Sneakers
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.