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.Le Silla Ankle Boot - Women Le Silla Ankle Boots online on YOOX United Kingdom - 11408524NXDolce & Gabbana Slippers - Women Dolce & Gabbana Slippers online on YOOX United Kingdom - 11460503LH , Dolce & Gabbana Sneakers - Women Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11365080AIL'arianna Ankle Boot - Women L'arianna Ankle Boots online on YOOX United Kingdom - 11377100VMTory Burch Black Logo City SandalsMISS Plum Formal Shoes Primary quality , Cell Surin 2 FM Men's Running Shoes | Puma White-Puma Black , Breaker Evolution Sneakers | BcktornBrwn-PWht-BcktornBrwn , Stephen Good London Ankle Boot - Women Stephen Good London Ankle Boots online on YOOX United Kingdom - 11533573AJWomen's Birkenstock Orange Madrid Sandals New varieties are introducedWOMENS Gold/Black Helena Sandals From the latest modelAdidas Gabor Ankle boots - wallaby/beigeBirkenstock ARIZONA - Mules Colour: steer indigoman/woman SoftWalk Urban Boots Excellent performance , Men/Women Vince Verrell 2 Clogs & Mules Seasonal promotionAdidas Selected Femme High heels - blackPro-Keds ROYAL TUMBLED - Trainers - white , Diemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11500603TI , Adidas Gabor WIDE FIT - Classic ankle boots - english brownU.S.Polo Assn. Boots - Men U.S.Polo Assn. Boots online on YOOX United Kingdom - 11515944SR , Ancarani Court - Women Ancarani Courts online on YOOX United Kingdom - 11457878QA , Lerre Court - Women Lerre Courts online on YOOX United Kingdom - 11515312SDLotto Leggenda Sneakers - Women Lotto Leggenda Sneakers online on YOOX United Kingdom - 11260343SXLemargo Ankle Boot - Women Lemargo Ankle Boots online on YOOX United Kingdom - 11530363BW , Gianna Meliani Court - Women Gianna Meliani Courts online on YOOX United Kingdom - 11362016TEVIONIC Quinn Keep your look cute and your feet comfortable in the classy Quinn from VIONICPrada Black Americas Cup Men's Noir On Grey Hi Top *mismatch* Sneaker Sneakersladies rebels Rust Ascot Wedges High quality and low effortLadies Brian Atwood Brown Sandals First class in his classWOMEN Giuseppe Zanotti Cruel Gold Sandals bestsell ,
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.