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.Steve Madden Ankle Boot - Women Steve Madden Ankle Boots online on YOOX United Kingdom - 11509290HB , Dolce & Gabbana Loafers - Women Dolce & Gabbana Loafers online on YOOX United Kingdom - 11519066SV , Sergio Levantesi Court - Women Sergio Levantesi Courts online on YOOX United Kingdom - 11534358WQ , Gianni Bini Gold Leather 8m. SandalsDibrera By Paolo Zanoli Ankle Boot - Women Dibrera By Paolo Zanoli Ankle Boots online on YOOX United Kingdom - 44970296MLChie By Chie Mihara Anissa - Court - Women Chie By Chie Mihara Courts online on YOOX United Kingdom - 11429708KBMoa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11580245DQLucy Choi London Court - Women Lucy Choi London Courts online on YOOX United Kingdom - 11475732WC , ladies FLY London Black Patent Wedges New design , Versace VITELLO - Trainers Colour: biancoThe Kooples Wood Heel Leather Sandal , mens/womens Frye Jenna Engineer Short Boots Official websiteMykonos w1g leather wedge sandals , camel, Pikolinos , Asfvlt Sneakers - Men Asfvlt Sneakers online on YOOX United Kingdom - 11580208TX , Santoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11519594HN , Anderson Boots - Men Anderson Boots online on YOOX United Kingdom - 11240322PHDiesel Sneakers - Men Diesel Sneakers online on YOOX United Kingdom - 11491010PN , Adidas Birkenstock ARIZONA - Mules - washed metallic antique copper , Versace Collection Loafers - Men Versace Collection Loafers online on YOOX United Kingdom - 11463633EBHogan Rebel Sneakers - Men Hogan Rebel Sneakers online on YOOX United Kingdom - 11298886BDMen/Women Tommy Hilfiger Lancer 3 Sneakers & Athletic Tommy Hilfiger Extreme speed logisticsT.U.K Loafers - Women T.U.K Loafers online on YOOX United Kingdom - 11273822IW , Jet-Set Paris Sandals - Women Jet-Set Paris Sandals online on YOOX United Kingdom - 11481753HH , John Galliano Loafers - Women John Galliano Loafers online on YOOX United Kingdom - 11343577MLRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11335114TWCharlotte Olympia Sandals - Women Charlotte Olympia Sandals online on YOOX United Kingdom - 44545720EL , lJupH5CO Kenneth Cole New York Hannon , King of the crowd Aerosoles Inner Circleladies Christian Louboutin Violette Bandra Platforms Immediate delivery , WOMEN Paloma Barceló Navy/White Wedges Excellent performance ,
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.