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.Hey Dude Ankle Boot - Women Hey Dude Ankle Boots online on YOOX United Kingdom - 11549507VVMarc Jacobs Ballet Flats - Women Marc Jacobs Ballet Flats online on YOOX United Kingdom - 11416931UN , Roger Vivier Ankle Boot - Women Roger Vivier Ankle Boots online on YOOX United Kingdom - 11501849BK , Fabio Rusconi Court - Women Fabio Rusconi Courts online on YOOX United Kingdom - 11265580NCChie Mihara Court - Women Chie Mihara Courts online on YOOX United Kingdom - 11522296OJConverse All Star Fast Break 83 Mid Nylon/Leather Ltd - Sneakers - Men Converse All Star Sneakers online on YOOX United Kingdom - 11336508IM , Nila & Nila Ankle Boot - Women Nila & Nila Ankle Boots online on YOOX United Kingdom - 11478755KDNike Kid Air Max 1 Gs Cool Grey/Volt-anthracit-white Boys 6.5y Girls 8 SneakersVEXED Sandalia Vexed De Piel Negra 16174 FASHION SANDALS FOR WOMENDolce&Gabbana Dolce & Gabbana High-top Crystals Sneaker Black Sneakers , MTNG 93970 C21456 Burdeos BOTíN PLANO DE MUJER , WOMENS Charles David Wedges Elegant and robust packagingCLARKS Glick Darby ZAPATO PLANO PARA MUJER , MISS Prada Blac Satin Formal Shoes Negotiatemens/womens PATRIZIA Tovei Sandals Orders are welcomeIntentionally Blank JESSICA - Mules , Adidas Pepe Jeans ROXY BASS - Trainers - black , Saucony Sneakers - Men Saucony Sneakers online on YOOX United Kingdom - 11525136FJDiadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11507022IHDondup Sneakers - Men Dondup Sneakers online on YOOX United Kingdom - 11463299WM , Weg Boots - Men Weg Boots online on YOOX United Kingdom - 11551007QOmen's/women's PUMA TECH Everfit + SF10 Sneakers & Athletic PUMA AffordablePuma | Puma Training Defy Knitted Sneakers In Red And Gold , The North Face YUKIONA MID - Winter boots Colour: tarmac green , Emporio Armani Loafers - Men Emporio Armani Loafers online on YOOX United Kingdom - 11379776UDUnisa Boots - Women Unisa Boots online on YOOX United Kingdom - 44848538IV , Rick Owens Sandals - Women Rick Owens Sandals online on YOOX United Kingdom - 11395525SD , Bruno Premi Sandals - Women Bruno Premi Sandals online on YOOX United Kingdom - 11464567CD , Excellent workmanship Rupert Sanderson Glynn , Women's Christian Louboutin White Tititata Pumps Cheap ideal ,
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.