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.Vivian Ballet Flats - Women Vivian Ballet Flats online on YOOX United Kingdom - 11506588QHNike Black Zoom Structure 19 Sneakers , Black Men's Huron Mesh Moc High Top Leather Sneaker Sneakers , womens Black Loafers Formal Shoes First in his classladies Tory Burch Orange Miller Sandals Attractive and durable , MISS Kork-Ease Black Gabriella Wedges environmentally friendly , men/women David Tate Stardust Heels Lightweight shoes , Fitters MARGE - Ballet pumps Colour: blackmens/womens Billabong Take A Walk Boots Year-end saleAdidas mint&berry Ankle boots - dark gray , Carshoe Boots - Men Carshoe Boots online on YOOX United Kingdom - 11496260AWTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11541153NMAdidas Desigual SHOES RETRO COURT TROPI - Sports shoes - blanco , Alberto Guardiani Loafers - Men Alberto Guardiani Loafers online on YOOX United Kingdom - 44922813XKMarc May Loafers - Men Marc May Loafers online on YOOX United Kingdom - 11247677UX , Rodo Court - Women Rodo Courts online on YOOX United Kingdom - 11533910XF , Bikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 44999424TT , Sebastian Sandals - Women Sebastian Sandals online on YOOX United Kingdom - 11331684HUEbarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11458560NX , Laura Biagiotti Sandals - Women Laura Biagiotti Sandals online on YOOX United Kingdom - 11556417QESergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11525903MO , Giuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11357532ROBurberry Red Tartan Trail Sneakers Sneakers , ladies Nike Blue Jordans Sneakers Discount , sZHYye62 LOLAS S032355555mpi HIGH-TOP TRAINERSFOR WOMENFull range of specifications Corral Boots C3384LifeStride Mallory The Mallory wedge has a cute and summer-ready style that will be perfect both at the beach and on a cruise. , Flojos Felix Trek to secret beaches and sandy locations in style with the Flojos Felix sandal!Women's Multicolor Spectrum Low Rise Sneakers The first set of comprehensive specifications for customers , Alexander Wang Black Silver Stud Slide 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.