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.Veronique Branquinho Ankle Boot - Women Veronique Branquinho Ankle Boots online on YOOX United Kingdom - 11544080RLMc2 Saint Barth Espadrilles - Women Mc2 Saint Barth Espadrilles online on YOOX United Kingdom - 11425892MK , 67 Sixtyseven Ankle Boot - Women 67 Sixtyseven Ankle Boots online on YOOX United Kingdom - 11542102FC , Officine Creative Italia Loafers - Men Officine Creative Italia Loafers online on YOOX United Kingdom - 11483881RM , Bruno Premi Loafers - Women Bruno Premi Loafers online on YOOX United Kingdom - 11534109FSDrkshdw By Rick Owens Sneakers - Men Drkshdw By Rick Owens Sneakers online on YOOX United Kingdom - 11462580IE , Women's J.Crew Ankle Strap Heel Sandals High quality products , Nike White Womens Zoom Pegasus 8 New Sneakers , mens/womens Nine West Radiant Heels Reliable performance , Leather ankle boots , black, Dr Martens , Puma LIMITLESS - Trainers - black , Men/Women Franco Sarto Dalton Clogs & Mules Elegant appearance , Adidas New Balance GW500 - Trainers - burgundy , men's/women's Daniel Green Abigail Slippers Not so expensivemen's/women's Reef Star Cushion Sassy Sandals buy online , Asics Sneakers - Men Asics Sneakers online on YOOX United Kingdom - 11360459RHSuperga® Sneakers - Men Superga® Sneakers online on YOOX United Kingdom - 11539307UX , House of Hounds | House Of Hounds Harpy chelsea boots in black chiffonMen/Women Crocs Sanrah Hammered Circle Wedge Heels Ideal gift for all occasionsPinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11369887EB , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11492462VE , Buttero® Ankle Boot - Women Buttero® Ankle Boots online on YOOX United Kingdom - 11556051NF , Bruno Bordese Sandals - Women Bruno Bordese Sandals online on YOOX United Kingdom - 11135829JR , Gianmarco Lorenzi Court - Women Gianmarco Lorenzi Courts online on YOOX United Kingdom - 11488376GP , Tory Burch Black Signature Wedge SandalsGQd7mA4N Blue by Betsey Johnson RoyalEarth Doral Make sure your season is as stylish as can be in the dreamy Doral boot from Earth , womens Jimmy Choo Fuchsia Vamp Platforms Full specification , Fendi Black Pink White Blue New SneakersMISS SCHUTZ Beige Leather Sandals Price reduction ,
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.