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.Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11289545NILe Marinē Loafers - Women Le Marinē Loafers online on YOOX United Kingdom - 11486709AS , Tory Burch Black Kailey Wedge SandalsG2DwhSjI men's/women's Trotters Americana Loafers Trendy , Reebok Cl Lthr Mid Gtx-Thin - Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11384356JS , Nike Sail and Metallic Gold Limited Edition Sky Hi Paris Dunks Sneakers , Ladies Nike Green Airmax Thea Sneakers Quality first , men's/women's Vince Camuto Valamie Heels Upper materialMen/Women Franco Sarto Josey Boots Excellent craftChula vista leather trainers , black, Levi's , Liu Jo Jeans GIGI - Slip-ons , Ras Loafers - Women Ras Loafers online on YOOX United Kingdom - 11511427FS , Skechers Sneakers - Men Skechers Sneakers online on YOOX United Kingdom - 11427373BOVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11492437NB , Pawelk's Boots - Men Pawelk's Boots online on YOOX United Kingdom - 11524558OX , Suicoke Sandals - Men Suicoke Sandals online on YOOX United Kingdom - 11402088WI , Doucal's Sneakers - Men Doucal's Sneakers online on YOOX United Kingdom - 11369734CFPhilippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11230458OJVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11573914DWPinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11548874FKHogan Sandals - Women Hogan Sandals online on YOOX United Kingdom - 11397947UMGuido Sgariglia Loafers - Women Guido Sgariglia Loafers online on YOOX United Kingdom - 11501484DU , Castañer Ankle Boot - Women Castañer Ankle Boots online on YOOX United Kingdom - 11501979FRYear-end sale La Sportiva G2 SM , Diesel Splish Add a splash of color to your poolside ensemble in the Diesel SplishAsics Yellow Plum Women's Gel Noosa Tri 9 Running SneakersMISS Manolo Blahnik Black Heels Sandals Louis, in detailManolo Blahnik Metallic "Liss" Bow Leather Wedge Sandals , women Dolce Vita Black Wedge Sandals Most practicallady Jimmy Choo Nude/Black Mandy Pumps Excellent features ,
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.