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.67 Sixtyseven Sneakers - Women 67 Sixtyseven Sneakers online on YOOX United Kingdom - 11489522DD , Air Jordan Multicolor Never Worn SneakersVibi Venezia X Yoox Loafers - Women Vibi Venezia X Yoox Loafers online on YOOX United Kingdom - 11379784BWDibrera By Paolo Zanoli Sandals - Women Dibrera By Paolo Zanoli Sandals online on YOOX United Kingdom - 11568715TODolce & Gabbana Ankle Boot - Women Dolce & Gabbana Ankle Boots online on YOOX United Kingdom - 11232242RV , Golden Goose Deluxe Brand Sneakers - Women Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11270172WLNike Free Rn 2018 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11540779WT , women Fendi Tomato Red Leather Sandals Special Price , ASOS DESIGN | ASOS TATE High WedgesBlauer MURRAY - Trainers - whiteKennel + Schmenger ELLE - Sandals , Tapalo leather loafers , brick, KostTed Baker NUSCALA - High heeled sandals Colour: ivoryHummel AEROCHARGE HB 220 2.0 - Handball shoes , men's/women's Nine West Braddy Heels a variety ofGlobe CHUKKA - Trainers - dark shadow/tobacco/winter , Geox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11496911FFNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11363143DA , Church's Loafers - Men Church's Loafers online on YOOX United Kingdom - 44928364XV , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11567249JRMen/Women Clarks Frelan Hike Boots Let our products go to the world , Diesel SLANTY D-SLANTY HPG - High heeled ankle boots Colour: schwarz , Cecconello Sandals - Women Cecconello Sandals online on YOOX United Kingdom - 11253331VV , Piampiani Ankle Boot - Women Piampiani Ankle Boots online on YOOX United Kingdom - 11491145TF , Bruno Bordese Sneakers - Men Bruno Bordese Sneakers online on YOOX United Kingdom - 11527339WB , FdZ5hhtn Havaianas Slim Paisage Flip Flops , a5MVgw28 SeaVees 05/66 Hawthorne Slip-On Standardclassic style Woolrich Fully Wooly Slip , fashionable Donald J Pliner BerkeleyValentino Brown Rockstud Bead City T Strap Block Heel Sandal 38 Pumps ,
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.