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.J|D Julie Dee Loafers - Women J|D Julie Dee Loafers online on YOOX United Kingdom - 11533146CNPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11242857TPPONS QUINTANA 3543 SHOES FOR WOMENAPLAUSO 2631 FASHION BOOTS FOR WOMEN , Ladies Reba Tan Wedges Order welcomeMagli By Bruno Magli Ankle Boot - Women Magli By Bruno Magli Ankle Boots online on YOOX United Kingdom - 11490737SPNike Blazer Low Se Premium - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11515065FO , Ralph Lauren Black Leather Classic Comfortable SandalsUnder Armour Ignite MLB V SL Chicago Cubs , men's/women's LAUREN Ralph Lauren Dayna Sandals Affordable , men/women Stuart Weitzman Theone Heels Human borderDiesel CLEVER S-CLEVER LOW - Trainers , BOBS from SKECHERS Bobs Bliss - Flirt , mens/womens Noclaim AGATA - Trainers Packaging diversity , Men/Women Kenneth Cole Reaction Cherry Boots Used in durabilityman/woman Avec Les Filles Myrina Flats Aesthetic appearanceIntentionally Blank KIMI PINT - Sandals Colour: pink , Springa Sneakers - Men Springa Sneakers online on YOOX United Kingdom - 11457109TRTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11440262GASantoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11478612BFMen/Women Soludos Tassel Slip-On Sneaker Sneakers & Athletic Soludos Shopping promotionman/woman Franco Sarto Jolette by SARTO Loafers High quality and cheap , Ash Espadrilles - Women Ash Espadrilles online on YOOX United Kingdom - 11257047UA , Divino Sandals - Women Divino Sandals online on YOOX United Kingdom - 11403494GTJeffrey Campbell Gray Faye City Sandals1dkqjTls Charlotte Olympia HG Bootie MLTST , Authentic guarantee Lowa Ticino GTX® LoSpeed refund Sam Edelman Hilty , Via Spiga Black Msrp Women's Leesa Criss Cross Ankle Strap SandalsTory Burch Dixon Patent Calf Red 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.