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.Tipe E Tacchi Sandals - Women Tipe E Tacchi Sandals online on YOOX United Kingdom - 11532909RC , Tory Burch Buckle City Slingback Sandals , WOMEN Sperry Yellow Stings Sneakers ElegantN.D.C. Made By Hand Sandals - Women N.D.C. Made By Hand Sandals online on YOOX United Kingdom - 11195771OHCALIFERS Bailarinas Mujer Piel Leticias Colletion Ja502d78-marino FASHION BALLERINAS FOR WOMENWOMENS Givenchy Tooth Lock Sandals Pumps High quality and economy , PEPE JEANS Pls30359 Clinton 099 Gold HIGH-TOP TRAINERS?FOR WOMENPuma Pink-ultramarine Green-oatmeal Creepers By Rihanna SneakersMISS Aqua/Gold Summer Sandals Crazy Price, Birmingham , Bianco BOW LOAFER - Mules From , men's/women's Aetrex Kylie Loafers Excellent functionmen's/women's Ariat Unbridled Jaelle Boots High quality and economy , men's/women's Dirty Laundry Karate Chop Boots renewed on timeman/woman Frye Chris Inside Zip Boots Big clearance sale , Pureboost xpose running shoes , blue, Adidas PerformanceLeather low top trainers with buckle strap , black, La Redoute Collections , men/women Columbia Fire Venture Mid Textile Sneakers & Athletic Columbia Various , Adidas Puma SUEDE HEART - EXCLUSIVE - Trainers - grey , Jeannot Loafers - Women Jeannot Loafers online on YOOX United Kingdom - 11488549KHAnaki Sandals - Women Anaki Sandals online on YOOX United Kingdom - 11332195QJTopshop Boots - Women Topshop Boots online on YOOX United Kingdom - 11529031OLVaerso Sandals - Women Vaerso Sandals online on YOOX United Kingdom - 11129794FX , Loretta Pettinari Boots - Women Loretta Pettinari Boots online on YOOX United Kingdom - 11496187RS , Premiata Ankle Boot - Women Premiata Ankle Boots online on YOOX United Kingdom - 11530239TP , Keys Ankle Boot - Women Keys Ankle Boots online on YOOX United Kingdom - 11467744JDFendi Ankle Boot - Women Fendi Ankle Boots online on YOOX United Kingdom - 11533559DSWOMENS Prada Metallic Green Strappy Sandals Economical and practical , LADY Dolce&Gabbana Black Patent Open Sandals High-quality materialsWOMEN Ann Taylor Black Wedges Strong value , woman Zara Black Up Leather Sandals High-quality
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.