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.Alain Tondowski Ankle Boot - Women Alain Tondowski Ankle Boots online on YOOX United Kingdom - 11531688SF , Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11547900DHOfficine Creative Italia Loafers - Women Officine Creative Italia Loafers online on YOOX United Kingdom - 11333078CWRed(V) Flip Flops - Women Red(V) Flip Flops online on YOOX United Kingdom - 11197075AE , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11478476QE , LV 48616 ZAPATO CONFORT DE MUJER , womens Céline Red Espardilles Wedges economical , LADY Alexander McQueen Gray Wedges Clever and practicalLadies Robert Clergerie Khaki /Puter Platforms newcomerMISS Tibi Ivory Ariya Sandal Platforms QueenslandDiesel D-VELOWS MID PATCH - High-top trainersCall it Spring THEWET - Sandalsman/woman Stuart Weitzman Clara Heels buy , men's/women's LifeStride Cielo Heels High gradeVans AUTHENTIC - Trainers - enamel blue/true whitemens/womens Eric Michael Martha Sandals Full range of specificationsMiss Selfridge ETEN TOP - High-top trainers Colour: white , Redstone Loafers - Men Redstone Loafers online on YOOX United Kingdom - 11520855EDMen/Women Nike Vapor Speed 2 Lax Sneakers & Athletic Nike special function , Apepazza Sandals - Women Apepazza Sandals online on YOOX United Kingdom - 11391618PE , 2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11453495XF , Quattrobarradodici Sneakers - Women Quattrobarradodici Sneakers online on YOOX United Kingdom - 11433770SK , Exe' Boots - Women Exe' Boots online on YOOX United Kingdom - 11467077FFPaola Ferri Boots - Women Paola Ferri Boots online on YOOX United Kingdom - 11225654CN , Lorenzo Mari Sandals - Women Lorenzo Mari Sandals online on YOOX United Kingdom - 11495571OHOnex Mermaid It is recommended that you order 1/2 to 1 full size larger than your usual size. , Christian Louboutin Nude Multicolor Bip Bip Rose Floral Velvet High Top Sneakers SneakersCéline Multi Color Skate Slip-on Sneakers Sneakers , Merrell Green and Brown Hiking Trailing Sandalslady Diane von Furstenberg Charcoal Platforms economical ,
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.