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.Michel Vivien Ankle Boot - Women Michel Vivien Ankle Boots online on YOOX United Kingdom - 11510154DMGrandinetti Ankle Boot - Women Grandinetti Ankle Boots online on YOOX United Kingdom - 11460890WRPIKOLINOS W1g-1602 PLATFORM SANDALS FOR WOMEN , woman Delicious White Ice Wedges Wholesale , Twin-Set Simona Barbieri Open-Toe Mules - Women Twin-Set Simona Barbieri Open-Toe Mules online on YOOX United Kingdom - 11484858GA , Smith's American Ankle Boot - Women Smith's American Ankle Boots online on YOOX United Kingdom - 11123681VEWOMEN Rag & Bone Sandals Make full use of materialsBERNIE MEV S041630000mtx WEDGE-HEEL SANDALS FOR WOMENUnisa WARHOL - High heeled sandals Colour: ocean , Miss Selfridge SKYLAR SLIDER - Mules , Men/Women Giuseppe Zanotti E800159 Sandals Export , 2750 lamew trainers , black, Superga , men/women Calvin Klein Maleena Sandals Online export store , mens/womens Mark Nason Beaumont Sandals The latest technologyBelstaff Sneakers - Men Belstaff Sneakers online on YOOX United Kingdom - 11503077CC , Public Desire | Public Desire Woke Smoke Clear Detail Heeled Ankle Boots , National Standard Sneakers - Men National Standard Sneakers online on YOOX United Kingdom - 11486639LFFabi Sandals - Women Fabi Sandals online on YOOX United Kingdom - 11415840TCStuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11155493XP , Sucre Ankle Boot - Women Sucre Ankle Boots online on YOOX United Kingdom - 11510855KRAlberto Gozzi Sandals - Women Alberto Gozzi Sandals online on YOOX United Kingdom - 11472267NB , Pretty Ballerinas Loafers - Women Pretty Ballerinas Loafers online on YOOX United Kingdom - 11544675CILa Carrie Sneakers - Women La Carrie Sneakers online on YOOX United Kingdom - 11501552TCAdidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11563561JFWomen's Guess Black/White Formal Shoes Comfort , nW4JNczu CALLAGHAN 14907.2 ZAPATILLA CON PLATAFORMASplendid Flynn Complement your chic summer style with the versatile Splendid Flynn sandal! , Liu •Jo Shoes Ankle Boot - Women Liu •Jo Shoes Ankle Boots online on YOOX United Kingdom - 11333032RULadies Jessica Simpson Cream/Natural Platforms Won highly esteemed and widely trusted at home and abroad , Ladies Jack Rogers Brown Navajo Sandals Attractive fashion ,
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.