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.Patrizia Pepe Ankle Boot - Women Patrizia Pepe Ankle Boots online on YOOX United Kingdom - 11548302TU , Fiorifrancesi Ankle Boot - Women Fiorifrancesi Ankle Boots online on YOOX United Kingdom - 11522095PA , Converse CHUCK TAYLOR ALL STAR HI GreenSaint-Honoré Paris Souliers Ballet Flats - Women Saint-Honoré Paris Souliers Ballet Flats online on YOOX United Kingdom - 11325855RIMISS Brian Atwood Wagner Heels Platforms Strong heat and heat resistanceCasadei Violet Patent Leather and Satin (Fits 6.5-7) SandalsWOMENS Valentino Red Rockstud Sandals High quality and economyESTHER MENDEZ Vant 58 FASHION BOOTS FOR WOMENwomens Nike Bamboo Wedges New varieties are introducedwoman Barneys Co-Op Navy Wedges Fast deliveryLadies Saint Laurent Aa521 Platforms Year-end salesCtas ii hi pastel high top trainers , beige, Converse , Bugatti RIVER EVO - Trainers - dark bluemens/womens See by Chloe SB29091 Boots Excellent value , Men/Women Frye Jefferson Ring Kepper Loafers Complete specifications , Ylati Sneakers - Men Ylati Sneakers online on YOOX United Kingdom - 11489034ASLanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11372468CAmens/womens New Balance WE495GP2 Sneakers & Athletic New Balance Elegant and solemn[Espadrij] Espadrilles - Women [Espadrij] Espadrilles online on YOOX United Kingdom - 11483919MP , Fabi Court - Women Fabi Courts online on YOOX United Kingdom - 11415441MUPennyblack Sandals - Women Pennyblack Sandals online on YOOX United Kingdom - 11368128BUBrian Atwood Court - Women Brian Atwood Courts online on YOOX United Kingdom - 11508346LPTory Burch Court - Women Tory Burch Courts online on YOOX United Kingdom - 11446223RFIcône Ankle Boot - Women Icône Ankle Boots online on YOOX United Kingdom - 11538917ENSophia Webster Espadrilles - Women Sophia Webster Espadrilles online on YOOX United Kingdom - 11556109RN , Elegant shape Lucky Brand Idara , Laredo Myra The Laredo® Myra boot has a gorgeous feminine style that will appeal to your cowgirl heart.WOMEN Christian Louboutin Pigalle 55 Pumps a good reputation in the worldWOMENS Alexandre Birman Gold Python Wedges Diverse new designWomen's Stuart Weitzman Sandal Platforms High-quality materials ,
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.