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.Stella Luna Ankle Boot - Women Stella Luna Ankle Boots online on YOOX United Kingdom - 11544138QRNike Nike Air Force - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11533884EE , Essentiel Antwerp Rabard - Boots - Women Essentiel Antwerp Boots online on YOOX United Kingdom - 11572096TAStella Mccartney Ankle Boot - Women Stella Mccartney Ankle Boots online on YOOX United Kingdom - 11465522RM , Nike Performance MERCURIAL VAPOR 12 ACADEMY NJR MG - Moulded stud football boots - amarillo/white/black , Paola Parisi Sandals - Women Paola Parisi Sandals online on YOOX United Kingdom - 11497348BO , FLEXIMAX 114 ZAPATO CONFORT DE MUJERLiu •Jo Court - Women Liu •Jo Courts online on YOOX United Kingdom - 11537792PJ , L24gz4Km Men/Women Naturalizer Kaye Sandals buyPuma X Shantell Martin Muse Maia Sm -Sunny Lime - Sneakers - Women Puma X Shantell Martin Sneakers online on YOOX United Kingdom - 11567248BAWomen's J.Crew Navy Blue Espadrille Wedges selling pricewomens Cole Haan Black Zerogrand Sandals High security , TRUFFLE Harp 27 FASHION FOOTWEAR FOR WOMENNATALIA BLANCO 75183ps08 FASHION FOOTWEAR FOR WOMEN , Women's Stella York Black Sneakers First qualityKaty Perry THE SHAY - T-bar sandals , Society POISON CHELSEA - Classic ankle boots - black/white , men's/women's Vince Camuto Ejella Sandals At an affordable priceUzurii GREEN DOLPHIN - T-bar sandals Colour: taupe , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11569384BX , men's/women's Steve Madden Cavern Sneakers & Athletic Steve Madden Clearance , Men/Women Italian Shoemakers Selina Heels Highly praised and appreciated by the consumer audienceCafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11515576IBiC4E6Ps1 SKECHERS 12934 TRAINERS FOR WOMENThe latest technology Cole Haan Yuliana PumpDifferent goods Mark Nason BucknerPersonalization trend Stuart Weitzman QuebecAquatalia Alaric Summer relaxin' looks real good in the Aquatalia® Alaric sneakerslady Nina Gold Tessie Formal Shoes Qualified productionladies Vince Camuto Red Gold Wedges Most economical ,
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.