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.Racine Carrée Ankle Boot - Women Racine Carrée Ankle Boots online on YOOX United Kingdom - 11332386EQ , Lilly Pulitzer Navy Mckim Wedge Sandals , Alma En Pena. Ballet Flats - Women Alma En Pena. Ballet Flats online on YOOX United Kingdom - 11487311XC , MISS Ash Black Eagle Wedges Beautiful design , Le Temps Des Cerises BASIC - Trainersmens/womens Pikolinos Avila W6H-8780 Boots cheap price , Men/Women Gabor Gabor 82.443 Loafers Easy life , Vero Moda VMLIA - Platform sandalsPepe Jeans TINKER 1973 - Trainers , adidas Originals DEERUPT RUNNER - Trainers , Converse Chuck 70 Equinox - Nubuck Ox , man/woman Vaneli Yachi Sandals Known for its good quality , man/woman Walking Cradles Feather Boots Clever and practicalmen's/women's Ryka Aurora Sneakers & Athletic Ryka buy , Msgm Sneakers - Women Msgm Sneakers online on YOOX United Kingdom - 11129175WQGeox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11198455EDValsport Sneakers - Men Valsport Sneakers online on YOOX United Kingdom - 11471035EU , Alexander Trend Boots - Men Alexander Trend Boots online on YOOX United Kingdom - 11455759GPFilling Pieces Sneakers - Men Filling Pieces Sneakers online on YOOX United Kingdom - 11486499CO , Macarena® Espadrilles - Women Macarena® Espadrilles online on YOOX United Kingdom - 11580867AF , Mally Loafers - Women Mally Loafers online on YOOX United Kingdom - 11526143PGKudetà Ankle Boot - Women Kudetà Ankle Boots online on YOOX United Kingdom - 11482963RTFiorentini+Baker Ankle Boot - Women Fiorentini+Baker Ankle Boots online on YOOX United Kingdom - 11031449EEStella Mccartney Sandals - Women Stella Mccartney Sandals online on YOOX United Kingdom - 11391235XVBibi Lou Sneakers - Women Bibi Lou Sneakers online on YOOX United Kingdom - 11553305MK , Get It Sandals - Women Get It Sandals online on YOOX United Kingdom - 11437082OJ , Marc Jacobs Black Runway Bootie Sandalswomen Matisse Gold Lefty Sandals CharacteristicComplete specification Old West Boots TBM3011Ladies Jimmy Choo Blue Formal Shoes Modern design
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.