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.Francesco Russo Ankle Boot - Women Francesco Russo Ankle Boots online on YOOX United Kingdom - 11481401KOMoon Boot Ankle Boot - Women Moon Boot Ankle Boots online on YOOX United Kingdom - 11481854XEGianni Marra Ankle Boot - Women Gianni Marra Ankle Boots online on YOOX United Kingdom - 11328096IR , Pretty Ballerinas Ankle Boot - Women Pretty Ballerinas Ankle Boots online on YOOX United Kingdom - 11510456IT , Juli Pascal Paris Ankle Boot - Women Juli Pascal Paris Ankle Boots online on YOOX United Kingdom - 11547798OA , Levi's? Shoes Jeffrey Hi 501 Button Your Fly , YOKONO Lucca 032 Cuero FASHION BOOTS FOR WOMEN , PANAMA JACK Vika WEDGE-HEEL SANDALS FOR WOMEN , BRUNO PREMI 2901 X SHOES FOR WOMEN , Lodi CABARE - Classic heels Colour: nero/multicolormens/womens Gabor Gabor 84.167 Flats Online , Jeffery West | Jeffery West Capone brogue shoes in blue , mens/womens Steve Madden Martini Heels for you to choosemen/women To Boot New York Sondro Sandals Crazy price , Skechers Sport HANIGER CASSPI - Trainers - white/navymen/women G by GUESS Londean Sandals buy online , Prada Court - Women Prada Courts online on YOOX United Kingdom - 11522417HPO.X.S. Sneakers - Men O.X.S. Sneakers online on YOOX United Kingdom - 11355095LB , Adidas Shoe The Bear EMMY HIKE - High-top trainers - dark grey , Calpierre Court - Women Calpierre Courts online on YOOX United Kingdom - 11579569PS , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11496763MI , Fru.It Ankle Boot - Women Fru.It Ankle Boots online on YOOX United Kingdom - 11487663RR , Lea Foscati Loafers - Women Lea Foscati Loafers online on YOOX United Kingdom - 44931357TD , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11335192BF , Jimmy Choo Multicolor Snakeskin Heels Sandals , 9ZCk69WD Havaianas Freedom SL Maxi Flip-Flopsretail price New Balance WC1296v2 , Women's Nine West Blac Formal Shoes Has a long reputation , women Rebecca Minkoff Silver Distressed Wedges Suitable for colorladies Valentino Nude 22925734 Sandals Stylish and charming ,
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.