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.Tua By Braccialini Sneakers - Women Tua By Braccialini Sneakers online on YOOX United Kingdom - 11485297INLola Cruz Ankle Boot - Women Lola Cruz Ankle Boots online on YOOX United Kingdom - 11265966OA , Suecomma Bonnie Ankle Boot - Women Suecomma Bonnie Ankle Boots online on YOOX United Kingdom - 11453061IPMen/Women Nike Free Train Instinct Sneakers & Athletic Nike a good reputation in the world , Giancarlo Paoli Court - Women Giancarlo Paoli Courts online on YOOX United Kingdom - 11479371HIFabbrica Deicolli Boots - Women Fabbrica Deicolli Boots online on YOOX United Kingdom - 11536426VTe67XwBT2 men's/women's Report Marianna Heels Non-slip , Arkk Copenhagen Raven Mesh S-E15 - Sneakers - Women Arkk Copenhagen Sneakers online on YOOX United Kingdom - 11342194JQ , Hunter Original Back Adjustable Short Gloss Rain BootsRyka Beige Satin and White Moira Walk SneakersSperry Gold Cup Captain's Ox Crepe Suede , woman Eric Michael Tan Wedges Great classificationWOMEN Burberry Blue Green Sandals Bestsellers worldwide , HUB SERVE - Ankle bootsAdidas Lacoste UNLINED CAW - Trainers - offwhite/light tan , mens/womens Toral Ankle boots high quality product , Chuck taylor all star ox trainers , black/pink, ConverseAdidas Gabor WIDE FIT - Slip-ons - schwarz/naturWl373esp leather trainers , blue grey, New BalanceHogan Loafers - Women Hogan Loafers online on YOOX United Kingdom - 11567707NIT.U.K Sneakers - Women T.U.K Sneakers online on YOOX United Kingdom - 11522545TL , Geox Sandals - Women Geox Sandals online on YOOX United Kingdom - 11191979KWArfango Loafers - Women Arfango Loafers online on YOOX United Kingdom - 11581628DO , Sebastian Espadrilles - Women Sebastian Espadrilles online on YOOX United Kingdom - 11562504QGD-S!De Sneakers - Women D-S!De Sneakers online on YOOX United Kingdom - 11236474PIMax Mara Sneakers - Women Max Mara Sneakers online on YOOX United Kingdom - 11554937NR , Jfk Ankle Boot - Women Jfk Ankle Boots online on YOOX United Kingdom - 11545853VSFauzian Jeunesse Court - Women Fauzian Jeunesse Courts online on YOOX United Kingdom - 44988467QT , Hogan Ankle Boot - Women Hogan Ankle Boots online on YOOX United Kingdom - 11247198DXlady Birkenstock Silver Gyzah Sandals product quality
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.