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.Manufacture D'essai Ankle Boot - Women Manufacture D'essai Ankle Boots online on YOOX United Kingdom - 11446267MURodolphe Menudier Ankle Boot - Women Rodolphe Menudier Ankle Boots online on YOOX United Kingdom - 11557546TA , Bruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11556500NEOfficine Creative Italia Loafers - Men Officine Creative Italia Loafers online on YOOX United Kingdom - 11528432TG , GBBRAVO 3938 FASHION SANDALS FOR WOMENAPLAUSO 2920 ZAPATO PLANO PARA MUJERISABERI 105 SANDALIA BIO PARA MUJER , Women's L.A.M.B. Beige Chunky Sandals durable , My Twin By Twin Set Ankle Boot - Women My Twin By Twin Set Ankle Boots online on YOOX United Kingdom - 11498139LIwomens B. Makowsky Bronze Heaven Sandals Elegant and robust packaging , men/women Vaneli Jarita Heels Economical and practicalman/woman Sperry A/O Boat Sperry Quality products , Puma SMASH V2 BUCK - Trainers - pomegranate/puma white , mens/womens Born Baker Sneakers & Athletic Born stable quality , Barbara leather sandals , blue, Les Tropeziennes Par M.Belarbi , Vans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11476029HO , Puma ONE 3 FG - Moulded stud football boots - silver/shocking orange/blackmen/women Schutz Wendine Sandals a good reputation in the world , Brunate Loafers - Women Brunate Loafers online on YOOX United Kingdom - 11531666LGLemàt Loafers - Women Lemàt Loafers online on YOOX United Kingdom - 11557699VBSuperga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11570939OB , Fitflop Sandals - Women Fitflop Sandals online on YOOX United Kingdom - 11574742MR , Repetto Ballet Flats - Women Repetto Ballet Flats online on YOOX United Kingdom - 11485769KA , Versus Versace Sneakers - Women Versus Versace Sneakers online on YOOX United Kingdom - 11497544MC , Sara® Collection Sandals - Women Sara® Collection Sandals online on YOOX United Kingdom - 11423956TXStuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11569680LQWEZntnBD Merrell Shiver Moc 2 Waterproof , Mezlan Wien Get into the swing of things in the Mezlan Wien!woman Isabel Marant Brown Platforms Known for its excellent quality , MISS Rochas Pink Formal Shoes Cheap ideal ,
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.