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.Roger Vivier Ballet Flats - Women Roger Vivier Ballet Flats online on YOOX United Kingdom - 11501094ED , Collection Privēe? Sneakers - Women Collection Privēe? Sneakers online on YOOX United Kingdom - 11491405MWWOMEN Fushia Summer Wedges Excellent quality , women AllSaints Omgeee Sandals Hot sale , Dibrera By Paolo Zanoli Ankle Boot - Women Dibrera By Paolo Zanoli Ankle Boots online on YOOX United Kingdom - 11446252IRDiadora Heritage Football 80'S Core 3 Evo - Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11567903DN , THIERRY RABOTIN 809 ZAPATO DE CU?A PARA MUJERLADY Prada Beige Suede Sandals Not so expensive , Women's Vince Black Tanner Platforms Large selection , LADY Casadei Soft Pink Double Platforms Repair , lady Chaco Feathered Blue Sandals quality productsGentle Souls by Kenneth Cole CharliValsport Sneakers - Men Valsport Sneakers online on YOOX United Kingdom - 11570400TR , men's/women's Pier One Boat shoes At a lower priceGiorgio Armani Boots - Men Giorgio Armani Boots online on YOOX United Kingdom - 11451537VNUtopie Loafers - Women Utopie Loafers online on YOOX United Kingdom - 11460700JA , Stiledivita Loafers - Women Stiledivita Loafers online on YOOX United Kingdom - 11465059ANCasadei Boots - Women Casadei Boots online on YOOX United Kingdom - 44541581TQDansko Sandals - Women Dansko Sandals online on YOOX United Kingdom - 11570779EE , Superga® Court - Women Superga® Courts online on YOOX United Kingdom - 11493344AI , Pantanetti Ankle Boot - Women Pantanetti Ankle Boots online on YOOX United Kingdom - 11512600OJBlugirl Blumarine Sandals - Women Blugirl Blumarine Sandals online on YOOX United Kingdom - 11571831MNPinko Ankle Boot - Women Pinko Ankle Boots online on YOOX United Kingdom - 11455954ANRoger Vivier Sandals - Women Roger Vivier Sandals online on YOOX United Kingdom - 11501833DG , Maison Margiela Gold Crackle Future Sneakers , Mephisto Tanina The Tanina sandal by Mephisto® is a true summer-icon that won't disappoint!Stuart Weitzman Black Dark Brown Simple Comfortable In Patent & Cork Material Sandals , Ladies Christian Louboutin Double Tutti Pumps Has a long reputation , woman Joie Powder Gold Adita Sandals Popular tide shoes , woman Valentino Bow Heels Platforms Elegant shape ,
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.