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.Proenza Schouler Open-Toe Mules - Women Proenza Schouler Open-Toe Mules online on YOOX United Kingdom - 11235335QW , Tod's For Ferrari Loafers - Men Tod's For Ferrari Loafers online on YOOX United Kingdom - 11577633IFSalvatore Ferragamo Orange Bright Statement Pumps , Converse CHUCK TAYLOR ALL STAR II - HI White / Gum0-105 Zero Cent Cinq Sneakers - Women 0-105 Zero Cent Cinq Sneakers online on YOOX United Kingdom - 11335168VKMISS Birkenstock Glittery Pink/Red Arizona Sandals First class in his class , Salvatore Ferragamo Navy Blu Fabric Midnight Skin Sandals , Ladies Stuart Weitzman Black A409981 Sandals Online shop , ladies K. Jacques Leopard/Natural Sandals Sale Italymen's/women's Nina Idabell Heels List of explosionsmens/womens Sbicca Teegan Sandals Crazy price, Birmingham , mens/womens Jessica Simpson Rainer Boots best sellerHUGO UPTOWN ASYA - Trainers Colour: black , Birkenstock ARIZONA - Mules Colour: steer indigo , Wallis BECCI - Classic heelsmen's/women's ASICS Comutora Sneakers & Athletic ASICS Innovative designmen/women K-SWISS BELMONT - Trainers Cost-effectivemen's/women's Frye Riley Perf Slide Sandals various kindsPollini Loafers - Men Pollini Loafers online on YOOX United Kingdom - 11569820FJ , Lanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11508197SAASOS DESIGN | ASOS DESIGN desert boots in stone suede with leather detail , mens/womens G.H. Bass & Co. Erin Clogs & Mules Popular tide shoesMen/Women Superga 2750 Estreme COTW Crystal Sneakers & Athletic Superga high qualityLeather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11536772LCMen/Women Tretorn Nylite Hi 4 Sneakers & Athletic Tretorn First grade in its class , Ballin Espadrilles - Women Ballin Espadrilles online on YOOX United Kingdom - 11432384JBMoma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11508225RTLeather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11564971GNWOMEN Miu Miu Pewter Crystal Sandals High quality and economy , Puma Burgundy By Rihanna Women's Velvet Creeper Sneakers ,
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.