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.Pierre Darré Ankle Boot - Women Pierre Darré Ankle Boots online on YOOX United Kingdom - 11545826IB , Pierre Darré Ankle Boot - Women Pierre Darré Ankle Boots online on YOOX United Kingdom - 11545123AMGianni De Simone Loafers - Men Gianni De Simone Loafers online on YOOX United Kingdom - 11574845VJLe Chicche® Sandals - Women Le Chicche® Sandals online on YOOX United Kingdom - 11343814ERVans Ua Sk8-Hi Slim Zip - Leather - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11217700TSLADY Burberry London Multicolor Hhkk Wedges Many varietiesladies Valentino Red Rockstud Leather Sandals special purchase , Women's Chaco Gray/White Strappy Sandals packaging diversity , Vagabond DAISY - Classic ankle bootsVans UA 59 - Slip-onsman/woman Frye Sienna Embroidery Ballet Flats Easy to usePinto Di Blu Over-the-knee boots Colour: anix / rekeol , mens/womens Miz Mooz Keegan Boots Selling new productsButtero® Boots - Men Buttero® Boots online on YOOX United Kingdom - 11533178SMHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11500398HE , Valentino Garavani Loafers - Men Valentino Garavani Loafers online on YOOX United Kingdom - 11398653TL , men's/women's G by GUESS Baylee3 Sneakers & Athletic G by GUESS Selected materialsJeremy Court - Women Jeremy Courts online on YOOX United Kingdom - 11502779CWBarracuda Sneakers - Women Barracuda Sneakers online on YOOX United Kingdom - 11536376QEGivenchy Sandals - Women Givenchy Sandals online on YOOX United Kingdom - 11399833DS , Melissa Sandals - Women Melissa Sandals online on YOOX United Kingdom - 11471730IN , Barracuda Sneakers - Women Barracuda Sneakers online on YOOX United Kingdom - 11416309QFLotto Leggenda Sneakers - Women Lotto Leggenda Sneakers online on YOOX United Kingdom - 11571481PD , Proenza Schouler Sandals - Women Proenza Schouler Sandals online on YOOX United Kingdom - 11400877HGExcellent quality ECCO Flash Buckle Sandal , Nike Quest Start a new adventure when you rock the Nike Quest running shoes.WOMENS Neil Barrett Black Patchwork Sandals First in his class , WOMENS Joie Pewter Sahara Sml-1590 Sandals Lush designWOMEN Clarks Black Sandal Wedges Online saleswomens SO White Sophionawhite Wedges Fair price ,
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.