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.Liu ?Jo Ankle Boot - Women Liu ?Jo Ankle Boots online on YOOX United Kingdom - 11519287JH , Roberto Festa Ankle Boot - Women Roberto Festa Ankle Boots online on YOOX United Kingdom - 11512221UX , Bruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11403791XMlady Alex Marie Tiger-print Wedges On-line , Steve Madden Dalis-C Sandal - Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11436630NINila & Nila Loafers - Women Nila & Nila Loafers online on YOOX United Kingdom - 11265268XS , Women's Ted Baker Black Satin Platforms Exquisite (medium) workmanship , Men/Women Frye Wyoming Engineer Boots Speed ??refund , Wfl574bc trainers , pink, New Balance , men/women Dr. Martens Ramsey Alt Creeper Oxfords Fine wild , men/women Born Bearse Sneakers & Athletic Born Very practicalCumin leather sandals , black/gold-coloured, Les Tropeziennes Par M.Belarbi , Adidas Alpe ALISA - Platform boots - blackButtero® Loafers - Men Buttero® Loafers online on YOOX United Kingdom - 11550554LGDorothy Perkins Wide Fit WIDE FIT DALLAS - High heelsCouture Loafers - Women Couture Loafers online on YOOX United Kingdom - 11485217HARodo Sneakers - Women Rodo Sneakers online on YOOX United Kingdom - 11450563FITod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11241410OPCafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 44965372KN , Gina Ankle Boot - Women Gina Ankle Boots online on YOOX United Kingdom - 11556299GLHogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11299916VR , Alaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11255733WUSun 68 Sneakers - Men Sun 68 Sneakers online on YOOX United Kingdom - 11372137LSVdWePewV Florsheim Estabrook Cap Toe Boot , Medium cost Sam Edelman GanesaBest-selling worldwide Scarpa Wrangell GORE-TEX , Lightweight shoes Spenco Kholo Plus , Trotters Qutie The Trotters Qutie offers quite the impressive comfort and style, perfect for your sophisticated office looks!women Dior Cream Christian Formal Shoes Large selection , Women's Prada Black Thong Sandals Low costs ,
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.