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.Jfk Ankle Boot - Women Jfk Ankle Boots online on YOOX United Kingdom - 11487863JO , Cole Haan Goldwyn II Crisscross SandalAPLAUSO 20491 BOTíN PLANO DE MUJER , Open Closed Shoes Boots - Women Open Closed Shoes Boots online on YOOX United Kingdom - 11440291UA , Officine Creative Italia Loafers - Women Officine Creative Italia Loafers online on YOOX United Kingdom - 11513363WHSKECHERS Work Comfort Flex SR HC Pro SR II , Bottega Veneta Black Nwot Leather Crystal Details Straps Sandals , Tamaris MILOS - Sandals Colour: multi metallicmens/womens KIOMI High heeled boots Exquisite workmanshipmen's/women's Rieker 10652 Loafers Elegant and sturdy set mealPrada Sandals - Men Prada Sandals online on YOOX United Kingdom - 11392103FAVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11201457CL , Selected Femme SLFALEXIA FRILLS BOOT - Classic ankle boots Colour: black , mens/womens Steve Madden Word Sandals Contrary to the same paragraphJust Cavalli Loafers - Men Just Cavalli Loafers online on YOOX United Kingdom - 44481544PN , Diadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11509523FT , Millà Sandals - Women Millà Sandals online on YOOX United Kingdom - 11459550CA , Ebarrito Boots - Women Ebarrito Boots online on YOOX United Kingdom - 11458674FUCalpierre Loafers - Women Calpierre Loafers online on YOOX United Kingdom - 11551462OPElvio Zanon Loafers - Women Elvio Zanon Loafers online on YOOX United Kingdom - 11496037CV , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11189138PA , Cult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11317960FRPrimadonna Ankle Boot - Women Primadonna Ankle Boots online on YOOX United Kingdom - 11495858LR , Philippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11571979LL , cKu8f9Rd FitFlop Petrina Faux Pony MoccasinNew in stock Deer Stags Meter Loafer , Acknowledgement feedback Vasque Trailbender II , ladies Charming Charlie Striped Sandals Wedges Used in durabilityAthletic Propulsion Labs Navy Apl Men’s Running Sneakers , Donald J. Pliner Red Rubber N 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.