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.Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11522723TO , Ruco Line Ankle Boot - Women Ruco Line Ankle Boots online on YOOX United Kingdom - 11476946CK , L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11356614UTBy A. Court - Women By A. Courts online on YOOX United Kingdom - 11456088AOSKECHERS Relaxed Fit Palen - Gadon , DORKING D-7687 THIGH BOOTS FOR WOMEN , 46m9pfEF men/women GUESS Lacie Sandals fashionSee By Chloé Ankle Boot - Women See By Chloé Ankle Boots online on YOOX United Kingdom - 11244986KL , Moa Master Of Arts Sneakers - Men Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11509824KLWOMEN Manolo Blahnik Brown Kitten Pumps The color is very noticeable , REFRESH 63718 C Negro WEDGE ANKLE BOOTS FOR WOMENMISS Vince Camuto Leopard Estera Wedges For sale , MISS Dolce&Gabbana H Formal Shoes Different styles , men/women Frye Cece Seam Tall Boots Online , men/women Bandolino Nola Heels Excellent quality , men/women Bandolino Belluna Boots Most practical , Keen TARGHEE MID WP - Walking boots Colour: raven/fried brick , Candice Cooper PLUS SHEARLING - High-top trainers , Laboratorio Base Sneakers - Men Laboratorio Base Sneakers online on YOOX United Kingdom - 11532981IO , Giuseppe Zanotti Sneakers - Men Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11264282NB , Ellery Sandals - Women Ellery Sandals online on YOOX United Kingdom - 11451932MB , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11223225KV , Patrizia Pepe Court - Women Patrizia Pepe Courts online on YOOX United Kingdom - 11240102VLNero Giardini Court - Women Nero Giardini Courts online on YOOX United Kingdom - 11503639NFCarlo Pazolini Sneakers - Women Carlo Pazolini Sneakers online on YOOX United Kingdom - 11407486IRHogan Rebel Sneakers - Men Hogan Rebel Sneakers online on YOOX United Kingdom - 11392731DC , Billabong Talia Live on the edge of city and unpaved roads ahead with the Billabong Talia bootie! , Nina Gaelen Spend your evening in the glamorous style of the Nina Gaelen dress heelsBrunello Cucinelli Black Leather Slip On Sneakers SneakersJimmy Choo Black Addison D'orsay Fabric Shimmer Pumps ,
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.