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.Philipp Plein Ankle Boot - Women Philipp Plein Ankle Boots online on YOOX United Kingdom - 11193303LNRoberto Cavalli Flip Flops - Women Roberto Cavalli Flip Flops online on YOOX United Kingdom - 11273239JJAcne Studios Ankle Boot - Women Acne Studios Ankle Boots online on YOOX United Kingdom - 11517094QBDolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11465555NB , TITI COUTURE Tich07no MENORQUINA PARA MUJERPUMA x SHANTELL MARTIN Basket Graphic Sneakers | Puma White-Sunny Lime | PUMA PUMA x SHANTELL MARTIN | PUMA United StatesGeorge J. Love Ankle Boot - Women George J. Love Ankle Boots online on YOOX United Kingdom - 11545103FFMARIA MARE 61410 C29242 Suedi Marino FASHION FOOTWEAR FOR WOMENValentino Yellow Garavani Rockstud Pumsp 38.5 PumpsUnder Armour LOCKDOWN 3 - Basketball shoesmen's/women's Jil Sander JS28220 Heels Quality FirstRiver Island High heeled sandals Colour: blackmens/womens Anne Klein Ferdie Heels Cheaper than the pricemens/womens Deer Stags Lohi Oxfords Let our products go to the worldParadox London Pink WIDE FIT LATIFA - Sandals Colour: silver shimmerCampo Neutro Loafers - Men Campo Neutro Loafers online on YOOX United Kingdom - 11509013FK , New Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11390397VS , Marina Yachting Sneakers - Men Marina Yachting Sneakers online on YOOX United Kingdom - 11503395AEUnder Armour Sneakers - Men Under Armour Sneakers online on YOOX United Kingdom - 11509015WWCasadei Boots - Women Casadei Boots online on YOOX United Kingdom - 11562634POadsukPbf SKECHERS Parallel - Universe Bootieuxgu0VaT Bates Footwear GX-8 GORE-TEX Side-Zip , rtdlRCD0 Cole Haan Original Grand Chukkaa wide range of products Spenco Yumi Canvas , Stella McCartney Black Orange and Beige Neon Mesh-paneled Printed Canvas Espadrille Sneakers , WOMENS Jimmy Choo Ivory Rebel Sandals Every article described is availableTory Burch Linosa Navy Festival Sawtooth Blue Mesh Suede"Reva"Sneakers Sneakers , Ladies Antelope Black Metallic 590 Wedges Average costs , woman Asics Black Kayano 21 Sneakers quality productsMISS Chloé Fun To Wear Sandals High security ,
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.