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.Coliac Martina Grasselli Sandals - Women Coliac Martina Grasselli Sandals online on YOOX United Kingdom - 11567558CXDolce & Gabbana Ankle Boot - Women Dolce & Gabbana Ankle Boots online on YOOX United Kingdom - 11547386NQTory Burch Red Currant Thandie Wedge Flip Flops - Magnolia SandalsRIVIERABONUCCI Sandalias Mujer Piel Ja3474h67-rojo SANDALIA PLANA DE MUJER , MARIA JAEN 6066 FASHION BALLERINAS FOR WOMEN , Men/Women Vince Camuto Thally Boots stable quality , Pier One Moccasins - light greenPepe Jeans TOURIST - Espadrilles , Men/Women Supra Skytop II Sneakers & Athletic Supra High securityOxford suede leather brogues , grey, Hush PuppiesSatin heels with pointed toe , bronze, Castaluna , Asfvlt Sneakers - Men Asfvlt Sneakers online on YOOX United Kingdom - 11128039WT , Brimarts Boots - Men Brimarts Boots online on YOOX United Kingdom - 11538150CS , Balenciaga Boots - Men Balenciaga Boots online on YOOX United Kingdom - 11433171US , Converse | Converse Chuck Taylor All Star leather studded hi sneakers in blackAdidas Shoe The Bear CECI DRAPE - Classic ankle boots - black , Alberto Guardiani Loafers - Men Alberto Guardiani Loafers online on YOOX United Kingdom - 11557695IGCesare Paciotti Sneakers - Men Cesare Paciotti Sneakers online on YOOX United Kingdom - 11506635DD , Ras Sandals - Women Ras Sandals online on YOOX United Kingdom - 11147595PLEbarrito Ballet Flats - Women Ebarrito Ballet Flats online on YOOX United Kingdom - 11552154SSGiorgio Armani Loafers - Women Giorgio Armani Loafers online on YOOX United Kingdom - 11579501BTIro Ankle Boot - Women Iro Ankle Boots online on YOOX United Kingdom - 11559304DA , Serafini Luxury Sneakers - Women Serafini Luxury Sneakers online on YOOX United Kingdom - 11512121HB , Novelty Ankle Boot - Women Novelty Ankle Boots online on YOOX United Kingdom - 11464324QOZara Sky Blue Faux Leather SandalsModern technology Rockport Works Trustride Work , Latest styles Deer Stags Abundantwomens Camilla Skovgaard Gray Leather Sandals Strong heat and heat resistance , Women's FitFlop Black Lolla Crackle Sandals Elegant and robust packaging , LADY BCBGeneration Black Patent Pumps Platforms Price reduction ,
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.