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.Maria Cristina Ankle Boot - Women Maria Cristina Ankle Boots online on YOOX United Kingdom - 11513731JP , Leather Crown Ankle Boot - Women Leather Crown Ankle Boots online on YOOX United Kingdom - 11531867OWCarla G. Ankle Boot - Women Carla G. Ankle Boots online on YOOX United Kingdom - 11522959VN , Open Closed Shoes Ankle Boot - Women Open Closed Shoes Ankle Boots online on YOOX United Kingdom - 11523106UN , Calvin Klein Collection Ankle Boot - Women Calvin Klein Collection Ankle Boots online on YOOX United Kingdom - 11436823WNWOMEN Vince Nude Sandal Sporty Wedges price concessions , SKECHERS Performance GOwalk Lite - Sweet Pea , man/woman Franco Sarto Jubilee 2 Boots delicatemens/womens White Mountain Hannon Flats Selected materials , élysèss Classic ankle boots Colour: calcida graphitman/woman Born Tepati Sandals Consumer firstmen's/women's ALDO Waovia Boots Excellent workmanship , Cole Haan Great Jones Plain Oxford , mens/womens Walking Cradles Buckley Loafers Orders are welcome , men/women Roxy Slippy Textile Sandals Easy to useNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11447051TB , Adidas Nike Sportswear AIR FORCE - Trainers - wolf grey/pure platinum/whiteCinzia Araia Sneakers - Men Cinzia Araia Sneakers online on YOOX United Kingdom - 11494179CEHundred 100 Loafers - Men Hundred 100 Loafers online on YOOX United Kingdom - 11501623BI , Philippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11357349RK , John Varvatos Sneakers - Men John Varvatos Sneakers online on YOOX United Kingdom - 11535825POBallin Court - Women Ballin Courts online on YOOX United Kingdom - 11576203MG , Ikaros Sandals - Women Ikaros Sandals online on YOOX United Kingdom - 11161632JX , Nine West Court - Women Nine West Courts online on YOOX United Kingdom - 11236147UIDaniele Ancarani Court - Women Daniele Ancarani Courts online on YOOX United Kingdom - 11514622TV , Stuart Weitzman Boots - Women Stuart Weitzman Boots online on YOOX United Kingdom - 11392720CB , Sam Edelman Sandals - Women Sam Edelman Sandals online on YOOX United Kingdom - 11342446MRU9xEDNcU CALLAGHAN 12903.1 TRAINERS FOR MEN , Comfortable and natural Corral Boots E1404 , Ladies Gray Mary Metallic Leather Wedges Let our products go out into the world ,
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.