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.Paloma Barceló Ankle Boot - Women Paloma Barceló Ankle Boots online on YOOX United Kingdom - 11512950PPV Italia Sandals - Women V Italia Sandals online on YOOX United Kingdom - 11171397JMJp/David Ankle Boot - Women Jp/David Ankle Boots online on YOOX United Kingdom - 11518955EEMERCEDES AMG PETRONAS Motorsport Drift Cat 7 Sneakers | Puma White-Puma White | PUMA Mercedes AMG Petronas | PUMA United States , Brooks Silver White and Teal Ariel Sneakers , Ladies Valentino Black Thong Sandals Bestsellers worldwide , woman Burberry Dark Nickel Pumps special purchaseMen/Women Joie Ajax Boots Rich on-time deliverySkechers Sport SKECH-AIR INFINITY - Trainersmen/women ALDO Sartano Oxfords Win the praise of customersAdidas Love Moschino PLATFORM - Trainers - biancoCalvin Klein Jeans ZELMA - Slip-ons Colour: black/metal redSperry Cold Bay Sport Boot w/ Vibram Arctic Gripman/woman Frye Laurie Harness Short Boots Current shape , men's/women's Nine West Radical Sandals Explosive good goods , Adidas KIOMI Classic ankle boots - blackHASSIA WIDE FIT BILBAO - Trainers Colour: anthratzitJ.Wilton Loafers - Men J.Wilton Loafers online on YOOX United Kingdom - 11481064VP , Tod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11541848FM , men/women Kenneth Cole Reaction Sharp-En Oxfords Different styles and stylesFlower Mountain® Sneakers - Men Flower Mountain® Sneakers online on YOOX United Kingdom - 11495394RMHundred 100 Boots - Men Hundred 100 Boots online on YOOX United Kingdom - 11523132EGBruno Magli Loafers - Men Bruno Magli Loafers online on YOOX United Kingdom - 11571246NI , Doucal's Loafers - Women Doucal's Loafers online on YOOX United Kingdom - 11045745KPCuplé Flip Flops - Women Cuplé Flip Flops online on YOOX United Kingdom - 11432114HW , Rene' Caovilla Sandals - Women Rene' Caovilla Sandals online on YOOX United Kingdom - 11531655NNSergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11531123GA , cheap Irish Setter Crosby 83618Rick Owens Dark Dust Sphinx Island Dunk Sneakers , LADY Dr. Scholl's Lime Sandals Buy online ,
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.