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.Puma Rs-0 Re-Invention - Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11567191UM , Halmanera Ankle Boot - Women Halmanera Ankle Boots online on YOOX United Kingdom - 11088409LDN.D.C. Made By Hand Ankle Boot - Women N.D.C. Made By Hand Ankle Boots online on YOOX United Kingdom - 11390294BO , Golden Goose Deluxe Brand Sneakers - Women Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11559452WE , Sperry Top-Sider Striper Ll Cvo - Sneakers - Men Sperry Top-Sider Sneakers online on YOOX United Kingdom - 11221049WX , Golden Goose Deluxe Brand White Double Pattern Leather Superstar Sneakers SneakersWOMEN Kimchi Blue Red Suede Wedges Every article described is availablewomen Alexander McQueen Black Formal Shoes ExcellentWOMENS Saint Laurent White Sl101h Sneakers brand , mens/womens Vaneli Arlen Loafers Easy to use , men/women Sesto Meucci Verine Boots Great choice , mens/womens Ariat Rowan Harness Boots main category , mens/womens Pedro Miralles Slip-ons Colour: camel Reasonable pricemen's/women's Sperry Crest Knoll Canvas Boots high qualityQuattrobarradodici Sneakers - Men Quattrobarradodici Sneakers online on YOOX United Kingdom - 11573405LWNational Standard Sneakers - Men National Standard Sneakers online on YOOX United Kingdom - 11534516HIPanella Sandals - Women Panella Sandals online on YOOX United Kingdom - 11474260JXTodai Loafers - Women Todai Loafers online on YOOX United Kingdom - 11480453VC , Gina Sandals - Women Gina Sandals online on YOOX United Kingdom - 11556344SPSchutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11435935IVSax Ankle Boot - Women Sax Ankle Boots online on YOOX United Kingdom - 44828219IG , Rodo Ankle Boot - Women Rodo Ankle Boots online on YOOX United Kingdom - 11542800JPEmporio Armani Loafers - Women Emporio Armani Loafers online on YOOX United Kingdom - 11423491HDvalue SeaVees Ocean Park A-LineSales Italy Scott Hawaii KakinaCarrucci Coltrane Dress to impress in the handsome Carrucci Coltrane dress shoeMISS Emilio Pucci Silk Sandals Has a long reputationValentino Metallic Gold Bow Peep Toe Leather Pumps , Women's Birkenstock Black Leather Thong Sandals Professional designWOMEN Christian Louboutin Heels 37.5 Pumps Nice color ,
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.