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.Dolce & Gabbana Loafers - Women Dolce & Gabbana Loafers online on YOOX United Kingdom - 11554475BHYOKONO Chipre-100 SANDALIA PLANA DE MUJER , Platform Slide Digital Embroidery Women's Sandals | Whisper White-Silver-Purple , Pedro Garcia Olive Green Perforated Suede Open Toe SandalsAEROSOLES Chair Metting SANDALIA PLANA DE MUJERwomen Pink Silk Formal Shoes Different stylesMen/Women Haflinger Marcy Sandals The latest technologyMen/Women Calvin Klein Lavida Loafers New designCaterpillar CAMBERWELL - Trainers - beaned , Metallic sandals , multi-coloured, Mademoiselle R , Adidas Trussardi Jeans RUNNING HEART - Trainers - black/white , Bianco WARM CHELSEA - Classic ankle boots - cognacmen/women RAYE Aurora Heels Every item described is availableAdidas L'INTERVALLE TEEVA - High heels - rainbowman/woman David Tate Newport Heels Beautiful and charmingAdidas Fila 94 - Trainers - whiteAsfvlt Sneakers - Men Asfvlt Sneakers online on YOOX United Kingdom - 11506789JQHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11559174FI , Red(V) Sneakers - Women Red(V) Sneakers online on YOOX United Kingdom - 11494449PDMelissa Sandals - Women Melissa Sandals online on YOOX United Kingdom - 11153625BELoretta Pettinari Boots - Women Loretta Pettinari Boots online on YOOX United Kingdom - 11479902AL , Ottod'ame Ballet Flats - Women Ottod'ame Ballet Flats online on YOOX United Kingdom - 11480602VQCharlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11544302NEMiista Mary - Court - Women Miista Courts online on YOOX United Kingdom - 11458495SSAdidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11462796GP , Fine wild Alegria Kayla ProfessionalDior Navy Blue Technical Fabric Fusion" Sneaker Good Condition SneakersReebok Black Purple Mint Women Blacktop Wedge Co-op SneakersBadgley Mischka Silver Carley Ii Gladiator Wedge 721 Sandals , lady Tory Burch Camel Carnell Wedges Excellent ,
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.