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.Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11518060DB , lady Jil Sander Wedges Exquisite workmanshipCALIFERS Sandalias Plataforma Mujer Piel Ja2001o64-nude WEDGE-HEEL SANDALS FOR WOMEN , LADY Jimmy Choo White Bergen Wedges Excellent valueBRUNATE 11197 ZAPATO DE CU?A PARA MUJERAsh White and Silver Wedge Sneaker Sneakers , MISS Miu Miu Mary Jane Pumps CharacteristicMen/Women Sesto Meucci 28439 Flats Price reduction , Men/Women Northside Burke II Heels excellent qualitymens/womens LifeStride Zola Loafers Many stylesPuma TSUGI JUN - TrainersTommy Hilfiger CORPORATE INTERWOVEN FLATFORM - Espadrilles Colour: blueMen/Women Summit by White Mountain Edeline Heels luxuriousMen/Women Donald J Pliner Lucia Sandals Fashion dynamic , Premiata Boots - Men Premiata Boots online on YOOX United Kingdom - 11529583OL , New Look Wide Fit WIDE FIT SIGNS - High heels Colour: goldmens/womens PUMA Ignite Limitless Knit Sneakers & Athletic PUMA durabilityLeather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11536782IJ , Carmen Saiz Sandals - Women Carmen Saiz Sandals online on YOOX United Kingdom - 11133542NMGianni Marra Sandals - Women Gianni Marra Sandals online on YOOX United Kingdom - 44924686QRElisabetta Franchi Sandals - Women Elisabetta Franchi Sandals online on YOOX United Kingdom - 11387689XCThe Seller Boots - Women The Seller Boots online on YOOX United Kingdom - 11504406DCGiuseppe Zanotti Loafers - Women Giuseppe Zanotti Loafers online on YOOX United Kingdom - 11545523EK , ladies Black V-roseanne Wedges Modern mode , Charming design ASICS Aggressor 4Clergerie Relastic Lend a casual look to your ensemble with the Robert Clergerie Relastic Sneakerlady Prada Pink Signature Logo Sandals Excellent qualityladies Fendi Black Spuntata Rete Pumps To adopt , Cole Haan White/Silver Nike Air B Sandalswoman BCBG Paris Brown Wedges Latest technology ,
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.