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.Emanuela Passeri Ankle Boot - Women Emanuela Passeri Ankle Boots online on YOOX United Kingdom - 11444609LVSKECHERS Performance GOwalk Evolution - Ultra , Nike Free Run Flyknit 2017 - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11317031PVKendall + Kylie Kkbritney/31 - Court - Women Kendall + Kylie Courts online on YOOX United Kingdom - 11253915INTwin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11504049CRGiuseppe Zanotti Metallic Gold New Mirror Leather High Top Sneakers 9 SneakersLADY Victoria's Secret Black 7/8 Sandals Elegant and stable packagingNew Balance White and Red Trimmed Logo SneakersCAPRICE 25420 FASHION ANKLE BOOTS FOR WOMENWomen's Merona Tan Sandals Wedges Sufficient supply , ladies Easy Spirit Brown 2 Sneakers ModernLadies Jimmy Choo Silver Sandals For sale , man/woman Clarks Enfield Senya Boots buy onlineMen/Women Harley-Davidson Aranda Boots best sellerAdidas Donna Carolina Slip-ons - texas navy , Call it Spring PIRESIEN - Platform sandals , Valsport Sneakers - Men Valsport Sneakers online on YOOX United Kingdom - 11367145JXSkechers Sport EQUALIZER 3.0 RELAXED FIT - Trainers - blackU.S.Polo Assn. Sneakers - Men U.S.Polo Assn. Sneakers online on YOOX United Kingdom - 11491736GFFilling Pieces Sneakers - Men Filling Pieces Sneakers online on YOOX United Kingdom - 11452923IADiesel Sneakers - Women Diesel Sneakers online on YOOX United Kingdom - 11534033LA , Aquazzura Ankle Boot - Women Aquazzura Ankle Boots online on YOOX United Kingdom - 11488811TB , Loretta Pettinari Boots - Women Loretta Pettinari Boots online on YOOX United Kingdom - 11252452BI , Luciano Padovan Sandals - Women Luciano Padovan Sandals online on YOOX United Kingdom - 11409213AW , Anthropologie Rose Gold Coaster High-top Sneakers , Various types and styles Not Rated AnoukReport Damzel You're no damsel in distress with these bold and rockin' Report Damzel bootiesTory Burch Navy Blue Mini Miller Thong 45mm Wedge Lizard Embossed Leather Sandals , Women's J. Reneé White Formal Shoes Carefully selected materials , woman Prada Orange Stud Sandal Wedges a great variety
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.