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.Tipe E Tacchi Court - Women Tipe E Tacchi Courts online on YOOX United Kingdom - 11448191OK , Laurence Dacade Ankle Boot - Women Laurence Dacade Ankle Boots online on YOOX United Kingdom - 11482327FEAngel Ballet Flats - Women Angel Ballet Flats online on YOOX United Kingdom - 11295247PF , Avec Modération Sandals - Women Avec Modération Sandals online on YOOX United Kingdom - 11443929MQ , Cris Vergré Loafers - Women Cris Vergré Loafers online on YOOX United Kingdom - 11512833KCKenneth Cole Reaction Loop 2 Nite , BALTARINI Karla-baltarini FASHION SANDALS FOR WOMEN , COLIRES C6068 Beige FASHION SANDALS FOR WOMEN , womens J.Crew Taupe Macallister Boot Wedges Fashion , womens Nike Light Neon Orange Sneakers promotion , Vero Moda VMSALLY - Ankle boots Colour: blackUzurii PRECIOUS CLASSIC - T-bar sandals , Just Cavalli Classic ankle boots Colour: tabacco , SKECHERS Flex Appeal - Speak Your Mind , Steffen Schraut NEW FASHION STREET - Ankle boots Colour: blackMen/Women Charles by Charles David Ria Heels Packaging diversityMen/Women Steven Springer Clogs & Mules Beautiful and charmingmen's/women's Ted Baker Torr Heels Different styles and styles , Tommy Hilfiger LEON - Trainers - midnightAttimonelli's Boots - Men Attimonelli's Boots online on YOOX United Kingdom - 11448058VGCafènoir Sneakers - Men Cafènoir Sneakers online on YOOX United Kingdom - 11439406LTmen's/women's Sol Sana Marcy Mule Heels Cheaper than the priceDorythè Loafers - Women Dorythè Loafers online on YOOX United Kingdom - 11544228BRF.Lli Bruglia Sandals - Women F.Lli Bruglia Sandals online on YOOX United Kingdom - 11345554GICharlotte Olympia Sandals - Women Charlotte Olympia Sandals online on YOOX United Kingdom - 11553536PP , Roger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 44993456KEXrCz6flS WOMEN Dolce&Gabbana 000 Pumps Excellent , women Gianvito Rossi Navy Blue Wedges a good reputation in the worldOpening Ceremony Black/ Silver Jindo Foil Leather Heeled - Black/Silver Sandals , Eric Javits Gold Woven Straw 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.