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.Grey Mer Ankle Boot - Women Grey Mer Ankle Boots online on YOOX United Kingdom - 11535977KI , Maxime Tanghe Ankle Boot - Women Maxime Tanghe Ankle Boots online on YOOX United Kingdom - 11472255QM , L' Autre Chose Court - Women L' Autre Chose Courts online on YOOX United Kingdom - 11383920TODolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11043058LD , man/woman Gold & Gravy Vincent Sneakers & Athletic Gold & Gravy High quality and low overheadElisa Conte® Sandals - Women Elisa Conte® Sandals online on YOOX United Kingdom - 11475425RU , Cult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 44794178CIPawelk's Ankle Boot - Women Pawelk's Ankle Boots online on YOOX United Kingdom - 11454884BQLOLAS S003671006agl FASHION SANDALS FOR WOMENDrkshdw By Rick Owens Sneakers - Men Drkshdw By Rick Owens Sneakers online on YOOX United Kingdom - 11560322MW , ladies YEEZY Black Tennis Sneakers Easy to clean surfaceClassic lfs leather trainers , white, Puma , Adidas s.Oliver Ankle boots - wineCole Haan Grandpro Tennis Lux Australian OpenMen/Women PARFOIS Trainers Colour: beige Moderate cost , man/woman Schutz Graceanne Clogs & Mules Valuable boutiqueSelected Boots - Men Selected Boots online on YOOX United Kingdom - 11468753AI , A.Testoni Sandals - Men A.Testoni Sandals online on YOOX United Kingdom - 11543934HP , men's/women's Diadora V7000 Weave Sneakers & Athletic Diadora the most economicalFlower Mountain® Sneakers - Men Flower Mountain® Sneakers online on YOOX United Kingdom - 11536216VU , mens/womens Leather trainers , beige, Nike Shoes A balance between toughness and hardnessQuattrobarradodici Sneakers - Women Quattrobarradodici Sneakers online on YOOX United Kingdom - 11546503JJMissoni Court - Women Missoni Courts online on YOOX United Kingdom - 11482497TWMelissa Ballet Flats - Women Melissa Ballet Flats online on YOOX United Kingdom - 11231194NWMoma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11479301NJAlberto Guardiani Loafers - Women Alberto Guardiani Loafers online on YOOX United Kingdom - 11560873IW , Personalization trend Chinese Laundry Zala SandalComfortable touch woman BCBGeneration Platforms StylishOscar by Oscar de la Renta Light Blue & White Caron Slide SandalsMISS Saint Laurent Black Fatale Platforms price concessions
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.