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.Vans Ua Half Cab - Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11327445HLManuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11332071SKAquazzura Black Spin Me Around Sandals , Irregular Choice BALMY NIGHTS White / RedPhil Gatièr By Repo Flip Flops - Women Phil Gatièr By Repo Flip Flops online on YOOX United Kingdom - 11395005PV , Converse Cons Auckland Racer Ox Nylon/Suede - Sneakers - Men Converse Cons Sneakers online on YOOX United Kingdom - 11121969JO , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11569397EK , PEPE JEANS Pls30361 Clinton 595 Navy HIGH-TOP TRAINERS?FOR WOMEN , Jerusalem Sandals The Good Shepherd Buckle - Womens , lady Bandolino Animal Print Wedges Long-term reputationladies Fendi Camel Pumps Platforms packaging diversityKimmi leather ankle boots , black, Cosmoparis , Tommy Jeans BASKET - Trainers , men's/women's Bandolino Kyrie Sandals High gradeKenneth Cole Reaction Fine Glass 5adidas Originals | adidas Originals Yung-1 Sneakers In White B37616men's/women's Wrangler Trainers - black Shoes Elegant appearanceGeremia Loafers - Men Geremia Loafers online on YOOX United Kingdom - 44959548BHAdidas Skechers ON THE GO JOY - Winter boots - dark taupe , Adidas adidas Originals LA TRAINER - Trainers - navy/burgundy/dark blue , Giuseppe Zanotti Sneakers - Men Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11545477MTVidorreta Espadrilles - Women Vidorreta Espadrilles online on YOOX United Kingdom - 11202314VU , Giampaolo Viozzi Court - Women Giampaolo Viozzi Courts online on YOOX United Kingdom - 11342052XBNr Rapisardi Loafers - Women Nr Rapisardi Loafers online on YOOX United Kingdom - 11505014HX , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11563206VWXq1Zom6i Lowa Zephyr Desert Mid TFPleasant appearance Sam Edelman Gio , MISS Steve Madden Blac Formal Shoes Let our products go out into the world , women Tory Burch Gold Platforms Easy to clean surfaceLadies Valentino Black Bow Platforms Crazy price ,
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.