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.Just Cavalli Sandals - Women Just Cavalli Sandals online on YOOX United Kingdom - 11334750SG , Right Bank Shoe Co™ Cajoe Heel , Skechers ON THE GO CITY 2 PUFF black , Twin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11497987XS , OTAZUA 208450 Hasta Talla 42 WEDGE ANKLE BOOTS FOR WOMENLADY Christian Lacroix Gold Formal Sandals Modern and elegant fashionLACOSTE 33caj1016 Lerond Nv1 Nvy-blu LOW-TOP TRAINERS FOR WOMENLADY Black Gladiator Sandals Wedges Customer firstAdidas Bruno Premi Sandals - bianco , SJP by Sarah Jessica Parker Supernova , mens/womens SKECHERS Reggae - Rasta Sandals Good world reputation , men/women DC Stag Sneakers & Athletic DC Pleasant appearance , Men/Women Nine West Kierstin Heels high quality product , Ras Sneakers - Women Ras Sneakers online on YOOX United Kingdom - 11511572BD , Lumberjack Boots - Men Lumberjack Boots online on YOOX United Kingdom - 11505624UGmens/womens Sanita Original Professional Primrose Clogs & Mules Don't worry when shoppingCafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11448934XO , Kandee Court - Women Kandee Courts online on YOOX United Kingdom - 11405770GNDsquared2 Sneakers - Women Dsquared2 Sneakers online on YOOX United Kingdom - 11558973OGLuca Valentini Court - Women Luca Valentini Courts online on YOOX United Kingdom - 11508125QD , Ash Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11257079KV , Racine Carrée Boots - Women Racine Carrée Boots online on YOOX United Kingdom - 11484674DRManuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11520395JX , Christian Louboutin White Patent Leather Sandals , Modern mode Jack Rogers Napa ValleyOnex Dolores It is recommended that you order 1/2 to 1 full size larger than your usual size.Liu •Jo Shoes Flip Flops - Women Liu •Jo Shoes Flip Flops online on YOOX United Kingdom - 11281652DJWOMENS Balenciaga White Race Runners Sneakers Bestsellers worldwidewoman Aquazzura Cognac Sandals Modern and elegant fashion , Jimmy Choo Leopard Print Pony Miami 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.