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.Aldo Castagna Ankle Boot - Women Aldo Castagna Ankle Boots online on YOOX United Kingdom - 11484781WF , Nike M2k Tekno - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11556946UXAvec Modération Sandals - Women Avec Modération Sandals online on YOOX United Kingdom - 11469439RUWODEN Ydun LOW-TOP TRAINERS FOR WOMEN , L' Autre Chose Ankle Boot - Women L' Autre Chose Ankle Boots online on YOOX United Kingdom - 11484974OL , Moa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11580414BI , Nike Zoom Stefan Janoski Cnvs - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 44787813DA , Women's Fendi Black Fendista Pump Platforms Every article described is availableXTI 30500 C Negro FASHION FOOTWEAR FOR WOMEN , DR. MARTENS S036218000bca LOW-TOP TRAINERS FOR WOMEN , lady Prada Brown Suede Wedges Elegant style , TOM TAILOR DENIM Over-the-knee boots Colour: black , Adidas mint&berry Boots - brownBlundstone Classic ankle boots Colour: brownSuperga® Sneakers - Men Superga® Sneakers online on YOOX United Kingdom - 11206194CWConverse CHUCK TAYLOR ALL STAR '70 OX - Trainers - burnt caramel/egret , men's/women's Neil Barrett Trainers Colour: red/white First grade in its classShoe The Bear ENZO - Cowboy/Biker boots - taupe , men's/women's Tecnica Moon Boot Vega Snake Sneakers & Athletic Tecnica Elegant and stable packaging , Le Stelle Court - Women Le Stelle Courts online on YOOX United Kingdom - 11450817UB , Susana Traca Sandals - Women Susana Traca Sandals online on YOOX United Kingdom - 11523880AO , Vic Matiē Sandals - Women Vic Matiē Sandals online on YOOX United Kingdom - 11355055DVTeva Blue and Black Wedge Sandals , YUL7omMH Seychelles By the Beach Slide , Orders are welcome PUMA Avid evoKNIT , ALDO Zoacien Seek refinement in the sweeter things in life, such as the Tallia Orange Zoacien loaferYmK9dVZT ladies Roberto Cavalli Platforms diversityDior Pink and Beige Trotter Open Toe Pump Mule Type Sandals , lady Bernie Mev Bronz Hallie Sandals a great variety , Rochas Multicolor Embellished Round-toe Jacquard Slides Sandals
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.