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.Loretta Pettinari Ankle Boot - Women Loretta Pettinari Ankle Boots online on YOOX United Kingdom - 11493791RCRick Owens Ankle Boot - Women Rick Owens Ankle Boots online on YOOX United Kingdom - 11398474SD , Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11527758TUAgile By Rucoline Sneakers - Women Agile By Rucoline Sneakers online on YOOX United Kingdom - 11335366SJ , 3.1 Phillip Lim Sandals - Women 3.1 Phillip Lim Sandals online on YOOX United Kingdom - 11117929FA , men/women Saucony Type A Sneakers & Athletic Saucony Highly appreciated and widely trusted in and out , Steve Madden Court - Women Steve Madden Courts online on YOOX United Kingdom - 11464944RBMoa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11580414BIManufacture D'essai Ankle Boot - Women Manufacture D'essai Ankle Boots online on YOOX United Kingdom - 11420762FUwomens Nike Denim Hi Dunk Sneakers Easy to clean surface , LADY White with Colors Fionah Wedges impeccable , Creative Recreation MARINA - Trainersmen/women SALEWA Mountain Trainer GTX Sneakers & Athletic SALEWA cheapestmens/womens Peralston Moccasins - rose Schuhe Attractive fashion , men/women Versace Jeans Trainers Colour: nero International choiceJeffrey Campbell STOOGES - Cowboy/Biker boots Colour: black box , Tod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11568526RNman/woman Levi's? WOODS - Trainers Don't worry when shoppingman/woman Roxy Rory Bayshore Sneakers & Athletic Roxy Seasonal hot saleChantal Court - Women Chantal Courts online on YOOX United Kingdom - 11556685EF , Geox Loafers - Women Geox Loafers online on YOOX United Kingdom - 11552970AE , Dondup Ankle Boot - Women Dondup Ankle Boots online on YOOX United Kingdom - 11557186WCKudetà Ballet Flats - Women Kudetà Ballet Flats online on YOOX United Kingdom - 11479849UDAngel Ankle Boot - Women Angel Ankle Boots online on YOOX United Kingdom - 11545606SV , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11563965KGpOcVOZiY Dockers Trustee Moc Toe Oxford , Trendy Keds Anchor Metallic Linen , Various types and styles Steve Madden Rayder , Women's Black Suede Heels Rhinestone Platforms Easy , lady Birkenstock Tan Suede Sandals Qualified production ,
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.