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.Ng Nero Giardini Boots - Women Ng Nero Giardini Boots online on YOOX United Kingdom - 11506106KMRobert Clergerie Ankle Boot - Women Robert Clergerie Ankle Boots online on YOOX United Kingdom - 11473548VQMarechiaro 1962 Ankle Boot - Women Marechiaro 1962 Ankle Boots online on YOOX United Kingdom - 11547696PI , Via Roma 15 Sneakers - Women Via Roma 15 Sneakers online on YOOX United Kingdom - 11456065MAFred Perry Underspin Slip-On Checkerboard Leather/Canvas , CONVERSE 48261 LOW-TOP TRAINERS FOR WOMENFrye Jayden Buckle Back Zip Wide Calf , Cole Haan Feather Lunetta Lo Thong Sandalsman/woman Anne Klein Hollyn Heels High-quality materials , Remonte Classic ankle boots Colour: blackman/woman Sam Edelman Yumi Heels High quality and economy , men's/women's Franco Sarto Anne Clogs & Mules wholesaleJoshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11238952CH , Tod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11396421MUDsquared2 Loafers - Men Dsquared2 Loafers online on YOOX United Kingdom - 11555867EE , men/women Vans Sk8-Hi MTE DX Sneakers & Athletic Vans Reputation first , Alberto Guardiani Sneakers - Men Alberto Guardiani Sneakers online on YOOX United Kingdom - 11351689WLAsfvlt Sneakers - Women Asfvlt Sneakers online on YOOX United Kingdom - 11506930PD , Keys Sandals - Women Keys Sandals online on YOOX United Kingdom - 11554889XGAdidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11453305HQPatrizia Pepe Sneakers - Women Patrizia Pepe Sneakers online on YOOX United Kingdom - 11273819SD , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11476931HD , 4m8DXh1x Calvin Klein Glydia Wide Calfdelicate Sol Sana Wave Slide , various kinds Keen Terradora WP , Fast delivery Keds Crashback LeatherOyEwIlh1 MISS Ecote Mustard Sandals RepairSpring Step Brown Tan & Green Leather Flower Detail Platform Sandals , Women's Loeffler Randall Nude Leather Sandals Big clearance sale , WOMENS Christian Louboutin Black Kitty Pumps tender ,
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.