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.Nero Giardini Ankle Boot - Women Nero Giardini Ankle Boots online on YOOX United Kingdom - 11487549PFFratelli Karida Ankle Boot - Women Fratelli Karida Ankle Boots online on YOOX United Kingdom - 11536423TJNo Name Sneakers - Women No Name Sneakers online on YOOX United Kingdom - 11162129BX , Carolina Foreman Engineer Steel Toe CA3522 , Black/Cleear Rinestone Accents Paris Wedge SandalsAgl Attilio Giusti Leombruni Ankle Boot - Women Agl Attilio Giusti Leombruni Ankle Boots online on YOOX United Kingdom - 11539903DXG Di G Sandals - Women G Di G Sandals online on YOOX United Kingdom - 11488965MH , woman Salvatore Ferragamo Tan Wedges Sale online store , EXE SHOES Carina-613 THIGH BOOTS FOR WOMEN , MISS Tory Burch Tanner Jeweled Sandals Wholesale , SKECHERS Relaxed Fit?: Velmen - EreverMen/Women Hush Puppies Gallia Chrysta Sandals Modern and elegantmens/womens A2 by Aerosoles Park Ave Heels discount price , Adidas Sixtyseven STAY - Trainers - blackBrimarts Boots - Men Brimarts Boots online on YOOX United Kingdom - 11467552UPmens/womens Johnston & Murphy Amber Bootie Boots List of explosions , Giuliano Galiano Sneakers - Men Giuliano Galiano Sneakers online on YOOX United Kingdom - 11394481FW , Saint Laurent Espadrilles - Men Saint Laurent Espadrilles online on YOOX United Kingdom - 11362281UQJoshua*S Sneakers - Women Joshua*S Sneakers online on YOOX United Kingdom - 11510763VF , Cantarelli Sandals - Women Cantarelli Sandals online on YOOX United Kingdom - 11373615WFCalpierre Ankle Boot - Women Calpierre Ankle Boots online on YOOX United Kingdom - 11459344KSBalenciaga Ankle Boot - Women Balenciaga Ankle Boots online on YOOX United Kingdom - 11520872ET , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11439102BCPrada Orange/Pink/Green Platform Thong/ 39 SandalsHVUWpkh4 MISS Ecco Sandals Bright colors , As of the latest model Steve Madden BarrettGeox Black Shahira Suede and Leather Croc Embossed Trainers Sneakers , Cole Haan Fuschia Red Patent Air Mae Woven Thong Sandals , womens Christian Louboutin Blac Platforms To adopt , lady Sophia Webster Lavender Flamingo Sandals On-line ,
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.