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.Miu Miu Ankle Boot - Women Miu Miu Ankle Boots online on YOOX United Kingdom - 11202287RNPierre Darré Sandals - Women Pierre Darré Sandals online on YOOX United Kingdom - 11240528AC , Cedric Charlier Sneakers - Women Cedric Charlier Sneakers online on YOOX United Kingdom - 11485711XN , Diadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11117415SM , SIXTYSEVEN S044478401blx LOW-TOP TRAINERS FOR WOMEN , YOKONO Sofia 005 SHOES FOR WOMENAvid evoKNIT Sports Stripes Running Shoes | Peacoat-GrayViolet-RibbonRed , MISS Cole Haan Black Sandals Diverse new designLINCE 61226 Blanco PLATFORM ESPADRILLES FOR WOMENMARTINELLI 13934933m-martinelli FASHION ANKLE BOOTS FOR WOMEN , ladies Prada White Vintage Sandals Cheap ideal , Wide fit black leather heels, sizes 38-45 , black, Castaluna , Adidas Marcel Ostertag x Tamaris Classic heels - blackmen/women River Island Mules Colour: orange Exquisite workmanshipmen's/women's Steve Madden Estoriaa Heels the most convenient , man/woman G by GUESS Klove Sandals Modern technology , men/women Ted Baker Sealls 3 Boots low costAdidas UMA PARKER Ankle boots - neroAdidas Marc O'Polo Heeled mules - blue/black , Dsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11564824OP , Dsquared2 Loafers - Men Dsquared2 Loafers online on YOOX United Kingdom - 11560999VBPlayhat Sneakers - Women Playhat Sneakers online on YOOX United Kingdom - 11362368UITod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11399253PA , Stella Luna Court - Women Stella Luna Courts online on YOOX United Kingdom - 11539312MGNike Pink Air Max 2014 Sneakers , adidas Black Men’s Nmd R1 SneakersSuperfeet Newberry These Superfeet Newberry kicks have a unique look with a ton of built in comfort!Nike Black and White Flyknit Lunar 3 SneakersWomen's Burberry Plaid Leather Trim Sandals Nice , WOMEN Aerosoles Silver Chrysanthemom Sandals To adopt ,
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.