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.Ruco Line Ankle Boot - Women Ruco Line Ankle Boots online on YOOX United Kingdom - 11477354UB , Alessandro Alaia® Firenze Loafers - Women Alessandro Alaia® Firenze Loafers online on YOOX United Kingdom - 11263209BXElisabetta Franchi Ballet Flats - Women Elisabetta Franchi Ballet Flats online on YOOX United Kingdom - 11244011WDRoberto Festa Ankle Boot - Women Roberto Festa Ankle Boots online on YOOX United Kingdom - 11485822NIThe Seller Ankle Boot - Women The Seller Ankle Boots online on YOOX United Kingdom - 11486308SPacnRBBPN mens/womens Report Suvi Flats fashionableAgl Attilio Giusti Leombruni Ankle Boot - Women Agl Attilio Giusti Leombruni Ankle Boots online on YOOX United Kingdom - 11539929URGioia Dell' Acqua Ballet Flats - Women Gioia Dell' Acqua Ballet Flats online on YOOX United Kingdom - 11531936FL , WOMENS Franco Sarto Yellow Wedges Stable quality , men's/women's Teva Terra-Float Livia Sandals Valuable boutique , Men/Women Eileen Fisher Max Sandals Outstanding functionGlittery leather heels , black, Mademoiselle R , Elly basic trainers , pink, BensimonPolo Ralph Lauren HANFORD - Trainers - black , Men/Women Nine West Nunzaya Heels King of quantityman/woman ECCO Sport Yura Low Gore-Tex Sneakers & Athletic ECCO Sport Sufficient supplyHenderson Loafers - Women Henderson Loafers online on YOOX United Kingdom - 11454476FQ , Vivian Loafers - Women Vivian Loafers online on YOOX United Kingdom - 11505101HL , Unisa Sandals - Women Unisa Sandals online on YOOX United Kingdom - 11472878BKDocksteps Ankle Boot - Women Docksteps Ankle Boots online on YOOX United Kingdom - 11478969FPDel Carlo Sandals - Women Del Carlo Sandals online on YOOX United Kingdom - 11584035LCFratelli Rossetti Loafers - Women Fratelli Rossetti Loafers online on YOOX United Kingdom - 11550459LH , Amoy SOLE / SOCIETY Nelmaeya , comfortability New Balance Numeric NM868Contrary to the same paragraph Brooks Addiction Walker V-Strap , Laredo Access Enter a whole new world of Western style with the Access boot from LaredoEarth Juno The Juno is a flashy little sandal for summer gatherings!womens Andre Assous Black Wedges Popular tide shoesLadies ALAÏA Multi-color Sandal Platforms retail price , MISS Prada Black Fume Pumps Modern mode ,
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.