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.Why Not? Ankle Boot - Women Why Not? Ankle Boots online on YOOX United Kingdom - 11498891CA , Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11118742LA , Laura Biagiotti Sandals - Women Laura Biagiotti Sandals online on YOOX United Kingdom - 11373479ALWo Milano Court - Women Wo Milano Courts online on YOOX United Kingdom - 11530323KW , SKECHERS Ske 14170nvw SLIP-ON PARA MUJERDibrera By Paolo Zanoli Ankle Boot - Women Dibrera By Paolo Zanoli Ankle Boots online on YOOX United Kingdom - 11074878FACinzia Soft By Mauri Moda Loafers - Women Cinzia Soft By Mauri Moda Loafers online on YOOX United Kingdom - 11467569BSREFRESH 63749 C Camel FASHION FOOTWEAR FOR WOMEN , BRUNATE 31384 ZAPATO DE CU?A PARA MUJER , men/women Sergio Rossi A80260-MAG05 Boots Moderate pricemen/women Donald J Pliner Giaco Boots SellingCourtset s lea trainers , white/green, Le Coq Sportifmen's/women's LAUREN Ralph Lauren Fareeda Boots Beautiful appearance , Adidas Adele Dezotti Ankle boots - navyK-SWISS COURT FRASCO - Trainers - white , Jeffrey Campbell AMARLEE - Classic heels Colour: blackHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11541501TN , mens/womens ASH Blast Boots Highly praised and appreciated by the consumer audience , Ras Sneakers - Women Ras Sneakers online on YOOX United Kingdom - 11511611BQValleverde Sandals - Women Valleverde Sandals online on YOOX United Kingdom - 11547445JAGianni Gregori® Boots - Women Gianni Gregori® Boots online on YOOX United Kingdom - 11519996LF , Emporio Armani Boots - Women Emporio Armani Boots online on YOOX United Kingdom - 11379819GL , Vittorio Virgili Court - Women Vittorio Virgili Courts online on YOOX United Kingdom - 11427163KGMiu Miu Court - Women Miu Miu Courts online on YOOX United Kingdom - 11010655ALHermès Tan Linen & Espadrille Sandalsthe most convenient Chrome Mirko Box Canvas , Don't worry when shopping Florsheim Classico Cap OxVEJA V-12-Velcro Take your look to the next step when you're running around town sporting the VEJA V-12 Velcro sneakersVIONIC Shane The Vionic Shane oxford is stylish, supportive, and comfortableNike Blue and Red Air Jordan Air Force Dope Casual Fresh New Air Jordan Womens Boys Sneakers ,
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.