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.Lady N Hunter Boots - Women Lady N Hunter Boots online on YOOX United Kingdom - 11545983KSAlberto Fermani Ankle Boot - Women Alberto Fermani Ankle Boots online on YOOX United Kingdom - 11566586OKPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11488070RBVIRAL S042468653mve LOW-TOP TRAINERS FOR WOMEN , Christian Louboutin Purple Gondolastrass Sneaker Blue Digitale Strass Low Top Flats Trainers Sneakers , Free People Gisele Block Heel - Sandals - Women Free People Sandals online on YOOX United Kingdom - 11502132GB , men/women Soft Style Danette Heels Moderate priceAdidas Tamaris Ankle boots - anthraciteman/woman Franco Sarto Piroette Heels fine , Men/Women G by GUESS Destin2 Heels Extreme speed logisticsPanama Jack IGLOO - Classic ankle boots Colour: bronzeAt.P.Co Boots - Men At.P.Co Boots online on YOOX United Kingdom - 11500700MA , Doucal's Sandals - Men Doucal's Sandals online on YOOX United Kingdom - 11391663BM , mens/womens Rieker D6751 Ursula 51 Heels Ideal gift for all occasionsCalvin Klein Jeans IONA - High-top trainers - dark burgundy , Rodo Sandals - Women Rodo Sandals online on YOOX United Kingdom - 11465926CJ , Ixos Court - Women Ixos Courts online on YOOX United Kingdom - 11384996DNCuoieria Ankle Boot - Women Cuoieria Ankle Boots online on YOOX United Kingdom - 11487097MI , Loretta Pettinari Sneakers - Women Loretta Pettinari Sneakers online on YOOX United Kingdom - 11564923DIMy Grey Sneakers - Women My Grey Sneakers online on YOOX United Kingdom - 11035358HG , Lanvin Ankle Boot - Women Lanvin Ankle Boots online on YOOX United Kingdom - 11499790VPPollini Ankle Boot - Women Pollini Ankle Boots online on YOOX United Kingdom - 11446850SOTRUE Rieker 537A6 Doris A6 , Environmentally friendly Justin Driscoll Steel ToeDifferent styles and styles Steve Madden Simon , Strong heat and heat resistance Ariat Workhog Venttek , Propet Kona Keep your summer casual and cool in the Kona fisherman sandal , WOMENS Prada Tan Platform Pumps Sandals Known for its excellent quality , women Valentino Black Wedges The newest stylewomens Brown Adora Sk02 Platforms 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.