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.Nr Rapisardi Ankle Boot - Women Nr Rapisardi Ankle Boots online on YOOX United Kingdom - 11481999LN , George J. Love Espadrilles - Women George J. Love Espadrilles online on YOOX United Kingdom - 11469008HR , N° 21 Ankle Boot - Women N° 21 Ankle Boots online on YOOX United Kingdom - 11467286SEKenzo Baskets Basses Main - Sneakers - Women Kenzo Sneakers online on YOOX United Kingdom - 11555306VXNike Nike Free Rn Distance - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11031420WQ , CLARKS Un Haven Strap FASHION BALLERINAS FOR WOMEN , Donald J. Pliner Cork and White Tilki Sandalsmen/women Franco Sarto Harmon Heels Shopping promotion , Native JEFFERSON 2.0 LITEKNIT - TrainersMen/Women Born Karoline Flats Elegant shape , le coq sportif VERDON WINTER SPORT - Trainers Colour: black/reglisse , Adidas TOM TAILOR DENIM Ankle boots - coal , Paloma Barceló LONICERA - Ankle cuff sandals Colour: black , men/women Tory Burch Logan Slide Sandals online shop , Rebecca Minkoff PRUE - Ankle boots Colour: black , Hogan Sandals - Women Hogan Sandals online on YOOX United Kingdom - 44976664AVDocksteps Boots - Men Docksteps Boots online on YOOX United Kingdom - 11020912MUSantoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11478649HFmens/womens Kenneth Cole Reaction Only One Clogs & Mules Perfect processingNew Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11492825HU , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11410688DTMarc Jacobs Sneakers - Men Marc Jacobs Sneakers online on YOOX United Kingdom - 11492850VRRoberto Festa Court - Women Roberto Festa Courts online on YOOX United Kingdom - 11544976KKDonald J. Pliner Tan Fifi Sandals , Good quality See by Chloe SB31131A , Big clearance sale FLY LONDON BEAK809FLY , Excellent performance Vince Camuto Tashinta , ladies Valentino Heavenly Garavani Leather Sandals Won highly esteemed and widely trusted at home and abroadStuart Weitzman Beige 45squarenudist Wheat Luxe Suede Kitten Heel SandalsWOMEN Lanvin Black/White/Gold Sandal/Slide Sandals Ideal gift for all occasions ,
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.