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.F.Lli Bruglia Ankle Boot - Women F.Lli Bruglia Ankle Boots online on YOOX United Kingdom - 11517868ILNorma J.Baker Sandals - Women Norma J.Baker Sandals online on YOOX United Kingdom - 11109309JPPinko Ankle Boot - Women Pinko Ankle Boots online on YOOX United Kingdom - 11262262VN , d7t0YEpv man/woman Report Martin Boots Selling , Melissa + Campana Ballet Flats - Women Melissa + Campana Ballet Flats online on YOOX United Kingdom - 11153612VA , LADY Charlotte Olympia Block Heel Platforms Special Price , TOSCA BLUE Sf17125222 FASHION BOOTS FOR WOMEN , Puma Multicolor States X Swash Toucan Sneakers , SKECHERS Active Breathe Easy - Lucky Lady , mens/womens ALDO Nilia Heels Excellent performance , Unisa ACOR - Ballet pumps , Chloé Court - Women Chloé Courts online on YOOX United Kingdom - 11461980RK , Richmond Boots - Men Richmond Boots online on YOOX United Kingdom - 11515359RK , Chippewa Boots - Men Chippewa Boots online on YOOX United Kingdom - 11480108WVAdidas 4th & Reckless HARRISON - Classic ankle boots - black , men's/women's Merrell Adhera Slide II Sandals a wide variety of goodsMéliné Sneakers - Women Méliné Sneakers online on YOOX United Kingdom - 11485980BWConverse Sneakers - Women Converse Sneakers online on YOOX United Kingdom - 11410942UWP448 Sneakers - Women P448 Sneakers online on YOOX United Kingdom - 11456896SI , Vic Matiē Boots - Women Vic Matiē Boots online on YOOX United Kingdom - 11457593BO , Voile Blanche Sandals - Women Voile Blanche Sandals online on YOOX United Kingdom - 11027627JQSergio Rossi Sandals - Women Sergio Rossi Sandals online on YOOX United Kingdom - 11528180NT , By A. Sandals - Women By A. Sandals online on YOOX United Kingdom - 11531985LK , Get It Sandals - Women Get It Sandals online on YOOX United Kingdom - 11437059KLgKAn8Q2h Dockers Midway Moc Toe OxfordClever and practical Havaianas Top Tiras Flip-Flops , Aetrex Kimber Whatever adventure life takes you on, make sure you have the Aetrex Berries Slip-On shoes to carry you through! , Prada Geranio (Pinky-salmon) Calzature *vernice 5* Patent Wedges SandalsTory Burch Nude Patent Holly Logo SandalsMISS Fendi Navy No Platforms Order welcome ,
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.