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.Proenza Schouler Ankle Boot - Women Proenza Schouler Ankle Boots online on YOOX United Kingdom - 11228547PWCafènoir Ballet Flats - Women Cafènoir Ballet Flats online on YOOX United Kingdom - 11458159SX , Air Jordan Black White 11 Sneakers , ladies J.Crew Apricot Sandals Good market , Reebok Zoku Runner Ultk Me - Sneakers - Women Reebok Sneakers online on YOOX United Kingdom - 11280175NQ , Loretta By Loretta Sandals - Women Loretta By Loretta Sandals online on YOOX United Kingdom - 11374069TBYOKONO Lucca 029 Cuero ZAPATO DE CU?A PARA MUJER , WOMEN adidas Pearl Nmd R1 Sneakers Louis, in detailARMANI JEANS B55m4 WEDGE ANKLE BOOTS FOR WOMEN , LADY Versace Black Medusa Sandals New marketWOMENS Isabel Marant Brown Sandals Elegant stylewomen Jimmy Choo Sandals Complete specification areaJack & Jones JFWBLADE - Trainers Colour: anthracite , man/woman Calvin Klein Lilliana Loafers Consumer firstmen/women Adrienne Vittadini Tex Boots fashion , mens/womens Steven Bambu Heels Excellent qualityBuffalo BELLE - High heelsSteve Madden Verdes Espadrille Wedge Sandal , men's/women's Summit by White Mountain Kaelyn Flats New in stock , Unisa Loafers - Women Unisa Loafers online on YOOX United Kingdom - 11519604LX , Icône Court - Women Icône Courts online on YOOX United Kingdom - 11521272GQPokemaoke Loafers - Women Pokemaoke Loafers online on YOOX United Kingdom - 11544452MUNike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11484577DL , Cdm Ankle Boot - Women Cdm Ankle Boots online on YOOX United Kingdom - 11483515IWNorma J.Baker Boots - Women Norma J.Baker Boots online on YOOX United Kingdom - 11477025KB , Erika Cavallini Sneakers - Women Erika Cavallini Sneakers online on YOOX United Kingdom - 11145508ITAcknowledgement feedback Spenco Kholo Breeze , Very good classification Stacy Adams Mandelladidas Black Nmd Casual Sneaker Big Kid / Women 6 Sneakers , Acne Studios Black Vibram Vintage Sneakers Sneakers ,
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.