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.Susana Traca Ankle Boot - Women Susana Traca Ankle Boots online on YOOX United Kingdom - 11497534EWMia Moltrasio Ballet Flats - Women Mia Moltrasio Ballet Flats online on YOOX United Kingdom - 11519246WNLadies Gold Emma Sandals selling priceUznSiSse men's/women's Aravon Peggy-AR Boots Cost-effective , Suede Deco Men's Sneakers | Purple Rose-Golden BrownDiadora Heritage Trident Brogue - Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 44926585UGman/woman Hush Puppies Briard Braid Slide Sandals Won highly appreciated and widely trusted at home and abroad , Roberto Della Croce Sneakers - Women Roberto Della Croce Sneakers online on YOOX United Kingdom - 11531176RP , lady Christian Louboutin Silver Wedge Sandals to buyXYON REVOLUTION Xy0011-emerald-w LOW-TOP TRAINERS FOR WOMEN , Leather ankle boots , beige, Tamaris , ASOS DESIGN | ASOS DESIGN Radiance suede pointed ankle bootsAdidas ALDO ONASA - High heels - boneAllSaints LOUISA - High heeled ankle boots Colour: blackPrada Court - Women Prada Courts online on YOOX United Kingdom - 44938821IXButtero® Sneakers - Men Buttero® Sneakers online on YOOX United Kingdom - 11536172HO , Church's Loafers - Men Church's Loafers online on YOOX United Kingdom - 11485386RQ , Adidas Calvin Klein Jeans ZOLAH SPLATTERED - Trainers - pink , Francesca Conoci Loafers - Women Francesca Conoci Loafers online on YOOX United Kingdom - 11398518DR , Eye Ankle Boot - Women Eye Ankle Boots online on YOOX United Kingdom - 11284705WI , Vans Authentic - Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11108435FGNike Mens Air Force New Sneakersu3zSieMM Kenneth Cole New York Tyler , raWQzvC2 PARC City Boot Sable Island , At a lower price New Balance 1500v4 Boa® , Blundstone BL1615 The Blundstone BL1615 boot boasts timeless style and maximum comfort, making this the ideal choice for everyday wear. , DTItLKLw LADY Prada Black/Cork Wedges Repair , WOMENS Franco Sarto Camel Wedges Different styles and styles , women Sam Edelman Silver Snakesin Wedges settlement Price , lady Miu Miu Silver Na Sneakers Sufficient supply ,
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.