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.Just Cavalli Sneakers - Women Just Cavalli Sneakers online on YOOX United Kingdom - 11142891OL , Elata Ankle Boot - Women Elata Ankle Boots online on YOOX United Kingdom - 11459053KLman/woman Magnanni Seca Perf Loafers Speed refundConverse CHUCK TAYLOR ALL STAR II - HI Black / White , L' Autre Chose Ankle Boot - Women L' Autre Chose Ankle Boots online on YOOX United Kingdom - 11012699BICesare Paciotti 4Us Ankle Boot - Women Cesare Paciotti 4Us Ankle Boots online on YOOX United Kingdom - 11483764VG , KICKERS 609461-50 Europea 8 Noir SANDALIA PLANA DE MUJERwomen Tan Never Worn Sandals Wedges Different products , s.Oliver High-top trainers - navy , men's/women's mint&berry Over-the-knee boots Colour: khaki Outstanding features , Cantarelli Loafers - Women Cantarelli Loafers online on YOOX United Kingdom - 11516902FL , Santoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11488507SAHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11310206BLSalomon XA PRO 3D GTX NOCTURNE - Trail running shoes Colour: blackAdidas Kennel + Schmenger BOBBY - Cowboy/Biker boots - schwarz , Tommy Hilfiger Sneakers - Men Tommy Hilfiger Sneakers online on YOOX United Kingdom - 11437795NRDiadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11343651BF , Dorothy Perkins Wide Fit WIDE FIT SHIMMY - High heeled sandals Colour: coralCafènoir Loafers - Women Cafènoir Loafers online on YOOX United Kingdom - 11515012OM , Unisa Boots - Women Unisa Boots online on YOOX United Kingdom - 11503090JL , P448 Sneakers - Women P448 Sneakers online on YOOX United Kingdom - 11558722GN , Rick Owens Sandals - Women Rick Owens Sandals online on YOOX United Kingdom - 11509353RXBruno Premi Sandals - Women Bruno Premi Sandals online on YOOX United Kingdom - 11556465PH , Stylish and fun English Laundry Primrose , ara Finley Step out in style this season in the fashionable ara Finley bootSupra Melrose Vintage skate inspiration reimagined for a longer life of supreme comfort, the Supra Melrose combines the traditional influence of casual low tops in a fortified design built for modern skateboarding! , IS TO ME Bota Is To Me De Piel Negro 17istreet1p09 FASHION BOOTS FOR WOMEN , Christian Louboutin Black / Grey Manovra 70 Slingback Pumps , Nike Orange Oxblood Air Force 1 Flyknit SneakersWOMENS Jessica Simpson Black Stelana Platforms economical ,
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.