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.Roberto Botticelli Sneakers - Women Roberto Botticelli Sneakers online on YOOX United Kingdom - 11495224HK , Sandro Midnight Blue Metallic Purple and Black New Without Box Baskets Albotorock Sneakers Sneakerswomen Prada White/Gold Pumps New product , Rejois By Gianni Renzi Loafers - Women Rejois By Gianni Renzi Loafers online on YOOX United Kingdom - 11488201SI , ZINETTI Sandalia Zinetti De Piel Beig 3570 FASHION SANDALS FOR WOMEN , UP TO YOU 5230 Burdeos FASHION FOOTWEAR FOR WOMENCLARKS Sarla Cadence SANDALIA PLANA DE MUJER , lady FitFlop Beige 113-017 Sandals Modern technology , Merrell MOAB 2 GTX - Hiking shoes , man/woman Kamik Lisbon Boots In short supply , ONLY SHOES ONLBRIGHT BOOTIE - Classic ankle boots Colour: blackAlphabounce rc w running shoes , black, Adidas Performanceadidas Originals CONTINENTAL 80S - Trainers - aerblu/scarlet/conavyASOS DESIGN | ASOS DESIGN Wide Leg Kadi heeled over the knee boots , mens/womens Sanita Smart Step Piper Clogs & Mules Tide shoes listmen's/women's Mark Nason Miki Sneakers & Athletic Mark Nason Don't worry when shopping , Schutz Court - Women Schutz Courts online on YOOX United Kingdom - 11527445MJ , Senso Sandals - Women Senso Sandals online on YOOX United Kingdom - 11529402ONGioseppo Loafers - Women Gioseppo Loafers online on YOOX United Kingdom - 11462494MGChiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11214720ED , Vic Matiē Sneakers - Women Vic Matiē Sneakers online on YOOX United Kingdom - 11457683GC , O.X.S. Ankle Boot - Women O.X.S. Ankle Boots online on YOOX United Kingdom - 11457540TIRene' Caovilla Court - Women Rene' Caovilla Courts online on YOOX United Kingdom - 11331882CWCrime London Sneakers - Men Crime London Sneakers online on YOOX United Kingdom - 11580434BFSee by Chloé Black Sb26192 Sandals3x0JKcR6 GADEA 41142 SHOES FOR WOMEN , Seasonal hot sale Clarks Keesha Luca , VIONIC Brody Keep your weekend vibes cool and casual with the VIONIC Brody slip-on , women Pewter/Black Heels Sandals The color is very noticeableMISS Fendi Monster Face Sandals Reliable performance ,
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.