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.F.Lli Bruglia Ankle Boot - Women F.Lli Bruglia Ankle Boots online on YOOX United Kingdom - 11518403SR , Nr Rapisardi Ankle Boot - Women Nr Rapisardi Ankle Boots online on YOOX United Kingdom - 11505063ILDolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11269821EB , STROVER 986 FASHION FOOTWEAR FOR WOMENDiadora Heritage N9000 Heritage - Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11202475PKV Italia Ankle Boot - Women V Italia Ankle Boots online on YOOX United Kingdom - 11171184RV , Dorateymur Lilac Violet Suede Harput Ii Loafer SandalsCHIRUCA Fal Cleta ANKLE BOOTS FOR MEN , Men/Women Joie Mai Heels Famous storeKappa NESH - Sports shoes , men/women Kentucky's Western Cowboy/Biker boots First qualityMen/Women Eileen Fisher Blog Clogs & Mules Excellent stretchingSantoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11541265RD , Mammut ALNASCA KNIT LOW GTX? WOMEN - Hiking shoes Colour: black/dark atollNike Performance TIEMPO LEGENDX 7 CLUB IC - Indoor football boots , men's/women's Calvin Klein Berke Sneakers & Athletic Calvin Klein Elegant style , mens/womens Adidas Women's Aqualette Slides Schuhe Elegant and robust menuman/woman David Tate Vivian Boots Every item described is available , Pal Zileri Boots - Men Pal Zileri Boots online on YOOX United Kingdom - 11549696VGEtq Amsterdam Sneakers - Men Etq Amsterdam Sneakers online on YOOX United Kingdom - 11342180WERodo Boots - Women Rodo Boots online on YOOX United Kingdom - 11450576JN , J.Born Ankle Boot - Women J.Born Ankle Boots online on YOOX United Kingdom - 11525192KIVincenzo Piccolo Court - Women Vincenzo Piccolo Courts online on YOOX United Kingdom - 11525387MK , Les Pumps Court - Women Les Pumps Courts online on YOOX United Kingdom - 11455241WXPrada Red Patent Leather Thong Kitten Heel Sandals , womens Fendi Black New Sandals Practical and economical , lady Juicy Couture Brown Wedge Sandals Pleasant feelingDonald J. Pliner Black Dixi Calf Sandalswoman Sam Edelman Gray/Cream Espradille Wedges Freewomen Stuart Weitzman Brown Fw98953 Sandals Really ,
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.