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.Sexy Woman Ankle Boot - Women Sexy Woman Ankle Boots online on YOOX United Kingdom - 11564452SQ , Adidas Originals Gazelle - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11173125CC , Birkenstock Black Gizeh Birko Flor Sandals , Basket Bling Women’s Sneakers | Puma White-Metallic GoldJuli Pascal Paris Ankle Boot - Women Juli Pascal Paris Ankle Boots online on YOOX United Kingdom - 11547963HP , New Balance 996 Premium - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11466894KTRIVIERABONUCCI Salones Mujer Piel Ja5122a68-blanco SHOES FOR WOMENmen/women Pikolinos Formentera W9S-1614 Boots General product , Angus leather ankle boots , black, Coolwaymen's/women's Superga 2795 Lame Sneakers & Athletic Superga fashionable , men/women Born Sophia Sneakers & Athletic Born Excellent valueAdidas New Balance WL373 - Trainers - elderberry , Roxy SET SESSION SHOE - Trainers Colour: grey heathermen/women Jessica Simpson Carri Heels Tide shoes listAnderson Loafers - Men Anderson Loafers online on YOOX United Kingdom - 11505877SU , Undercover Sandals - Men Undercover Sandals online on YOOX United Kingdom - 11402807NNPollini Loafers - Men Pollini Loafers online on YOOX United Kingdom - 11447485KDMiss Selfridge DAILY MUL STRAP - High heeled ankle bootsmens/womens DC Midway SN Sneakers & Athletic DC Personalization trendMaimai Sneakers - Women Maimai Sneakers online on YOOX United Kingdom - 11501954DEDeimille Court - Women Deimille Courts online on YOOX United Kingdom - 11338913XCLove Moschino Sneakers - Women Love Moschino Sneakers online on YOOX United Kingdom - 11310850BF , Norma J.Baker Court - Women Norma J.Baker Courts online on YOOX United Kingdom - 11516238IQLe Silla Court - Women Le Silla Courts online on YOOX United Kingdom - 11409966VGCeline Ankle Boot - Women Celine Ankle Boots online on YOOX United Kingdom - 11499785TJ , Pantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11338663UV , Outstanding function Caterpillar Chromatic CT , Moderate cost Klogs Footwear TiburonCommon Projects White Classic Court Low Top Achilles SneakersWOMENS Pedro Garcia Oxblood Thora Sandals For your choice ,
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.