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.Moon Boot Ankle Boot - Women Moon Boot Ankle Boots online on YOOX United Kingdom - 11482019SWPepe Jeans Ankle Boot - Women Pepe Jeans Ankle Boots online on YOOX United Kingdom - 11577802UTMaison Margiela Ankle Boot - Women Maison Margiela Ankle Boots online on YOOX United Kingdom - 11309360LU , Dune London Kandis - Sandals - Women Dune London Sandals online on YOOX United Kingdom - 11451422MN , Men/Women Pier One Cowboy/Biker boots Highly praised and appreciated by the consumer audience , COOLWAY Avocat PLATFORM SHOES FOR WOMENMarc By Marc Jacobs Court - Women Marc By Marc Jacobs Courts online on YOOX United Kingdom - 11532412UM , Steve Madden Camel Rizzaa Strappy Low Heel In Suede SandalsLindsay Phillips Gold Sharyn Slide Snap 7006 Sandals , women Lucky Brand Brown Sandals Platforms Elegant styleladies Zara Platform Sandals Elegant and stable packagingmens/womens Sigerson Morrison Pramod Heels Year-end sale , Leather brogues , nude, La Redoute Collections , mens/womens Tamaris Sandals Colour: black matt Different goodsTamaris Heart & Sole High heeled sandals Colour: taupe , mens/womens Tory Burch Arden Platform Oxford Oxfords Very good colormen's/women's Diadora N9000 MM EVO Sneakers & Athletic Diadora modern , Under Armour Sneakers - Men Under Armour Sneakers online on YOOX United Kingdom - 11247291QV , Profession: Bottier Loafers - Men Profession: Bottier Loafers online on YOOX United Kingdom - 11169631VRAlessandro Dell'acqua Loafers - Men Alessandro Dell'acqua Loafers online on YOOX United Kingdom - 11428218WQAndrea Morelli Sneakers - Men Andrea Morelli Sneakers online on YOOX United Kingdom - 11428415XHValentino Garavani Loafers - Men Valentino Garavani Loafers online on YOOX United Kingdom - 11544044LIKhrio' Court - Women Khrio' Courts online on YOOX United Kingdom - 11326987XN , Nike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11425453MQJeannot Sandals - Women Jeannot Sandals online on YOOX United Kingdom - 11521940UPMagrit Sandals - Women Magrit Sandals online on YOOX United Kingdom - 11568899PW , Bruno Loasses Sneakers - Women Bruno Loasses Sneakers online on YOOX United Kingdom - 11457035TLVersace Flip Flops - Women Versace Flip Flops online on YOOX United Kingdom - 11564590XC , Quality products Taryn Rose Bryanna , WOMENS Neil Barrett Black Patchwork Sandals First in his class ,
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.