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.Grey Mer Ankle Boot - Women Grey Mer Ankle Boots online on YOOX United Kingdom - 11488639VR , Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11563767LMNike Nike Air Max - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11373695JIPantofola D'oro Sneakers - Women Pantofola D'oro Sneakers online on YOOX United Kingdom - 11456973TC , CLARKS Spiced Ava FASHION SANDALS FOR WOMEN , Steve Madden Black and White Heels Sandalsmen's/women's Tommy Hilfiger Sunday Heels classic styleMen/Women Hush Puppies Gallant Parkview Loafers auction , mens/womens Naturalizer Janet Loafers Quality queenSKECHERS Relaxed Fit Tantric - RavelAsics Tiger GEL MAI - Trainers - black , man/woman Sperry Rio Vail Boots Extreme speed logistics , Hudson Boots - Men Hudson Boots online on YOOX United Kingdom - 11581716KMCamper Sneakers - Men Camper Sneakers online on YOOX United Kingdom - 11555407GV , Converse CHUCK TAYLOR ALL STAR CAMPUS - High-top trainers - blue/shoreline blue/whiteNew Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11503294FA , Oroscuro Boots - Women Oroscuro Boots online on YOOX United Kingdom - 11455285NMStele Sneakers - Women Stele Sneakers online on YOOX United Kingdom - 11454453ED , Diesel Sneakers - Women Diesel Sneakers online on YOOX United Kingdom - 11491433SSDamy Ankle Boot - Women Damy Ankle Boots online on YOOX United Kingdom - 11501699SIVeronique Branquinho Boots - Women Veronique Branquinho Boots online on YOOX United Kingdom - 11489226GSRoyal Republiq Sneakers - Women Royal Republiq Sneakers online on YOOX United Kingdom - 11209323BP , Pantanetti Ankle Boot - Women Pantanetti Ankle Boots online on YOOX United Kingdom - 11482275MV , Fratelli Rossetti Loafers - Women Fratelli Rossetti Loafers online on YOOX United Kingdom - 11550350QA , Sam Edelman Sandals - Women Sam Edelman Sandals online on YOOX United Kingdom - 11340107US , Marc Edelson Boots - Men Marc Edelson Boots online on YOOX United Kingdom - 11312392MWYear-end sale Gabor Gabor 96.095 , Medium cost Bacco Bucci Liam , woman Tory Burch Sofia Wedges Different styles and stylesladies Gianfranco Ferre Brown Platforms Customer first ,
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.