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.Nila & Nila Boots - Women Nila & Nila Boots online on YOOX United Kingdom - 11473459US , Tory Burch Sandals - Women Tory Burch Sandals online on YOOX United Kingdom - 11205769KNStele Ankle Boot - Women Stele Ankle Boots online on YOOX United Kingdom - 11454448NWwoman Burberry Beige Sneakers Different products , Twin-Set Simona Barbieri Ballet Flats - Women Twin-Set Simona Barbieri Ballet Flats online on YOOX United Kingdom - 11484855QCAdidas Originals Adidas 350 - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11504692GM , IGI AND CO 4806 Gore-tex LOW-TOP TRAINERS FOR WOMENEric Javits Antique/ Black Stubra Straw & Leather Slingback SandalsWOMEN Kenneth Cole Black Wedges Various current designs , Nike Women's Free Cross Bionic New Sneakers , lady Jimmy Choo Nanda Sandals Fine workmanship , Converse Jack Purcell? Jack Washed Marble Nubuck Ox , mens/womens Dolce Vita Nyke Boots Elegant style , mens/womens Unisa Honi Boots Moderate price , man/woman Pepen Sole Platform sandals Shopping promotion , mens/womens Calvin Klein Bethan Heels Orders are welcomePeter Kaiser HILINA - High heels Colour: navyVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11574109NT , Tod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11541151VG , Superga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11489837TRDiesel Boots - Women Diesel Boots online on YOOX United Kingdom - 11532753QTGarrice Sandals - Women Garrice Sandals online on YOOX United Kingdom - 11561620QT , Mi/Mai Ankle Boot - Women Mi/Mai Ankle Boots online on YOOX United Kingdom - 11517785KF , Casadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11255295SU , Tabitha Simmons Sandals - Women Tabitha Simmons Sandals online on YOOX United Kingdom - 11523442OI , Manuel Ritz Loafers - Men Manuel Ritz Loafers online on YOOX United Kingdom - 11291117FNXfQkT3S5 CALLAGHAN 21908.3 SHOES FOR WOMENComplete specification Reef Cushion Bounce Woven , Fair price SAS Patriot Non-SlipHermès Rouge Leather Night 70 Slingback Sandals ,
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.