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.Bianca Di Ankle Boot - Women Bianca Di Ankle Boots online on YOOX United Kingdom - 11482407GM , Jeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11467107LEAncient Greek Sandals Sandals - Women Ancient Greek Sandals Sandals online on YOOX United Kingdom - 44464633LV , Paola D'arcano Court - Women Paola D'arcano Courts online on YOOX United Kingdom - 11485332TX , Patrizia Bonfanti Loafers - Women Patrizia Bonfanti Loafers online on YOOX United Kingdom - 11258566MFMot-Clè Ankle Boot - Women Mot-Clè Ankle Boots online on YOOX United Kingdom - 11516166AE , Moncler White Angeline Scarpa Sneaker Sneakers , Golden Goose Deluxe Brand Ankle Boot - Women Golden Goose Deluxe Brand Ankle Boots online on YOOX United Kingdom - 11463877VP , MISS Matt Bernson Black 234567 Wedges Stylish and funnyBOBS from SKECHERS Bobs Plush - Cat Party , Men/Women Sam Edelman Raya Flats reliable qualitymen/women LAUREN Ralph Lauren Karlia Heels New product , Hamaki-Ho Loafers - Men Hamaki-Ho Loafers online on YOOX United Kingdom - 11510113TU , Santoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11410714KF , Adidas Shoe The Bear EMMY SLOUCHY - Wedge boots - black , Pantofola d`Oro LAZZARINI 2.0 - Moulded stud football boots - bianco/neromen's/women's Swedish Hasbeens Lacy Sandal Clogs & Mules Carefully selected materials , Converse CHUCK TAYLOR ALL STAR HI - High-top trainers Colour: blancFornarina Loafers - Women Fornarina Loafers online on YOOX United Kingdom - 11476679ABSilvian Heach Sneakers - Women Silvian Heach Sneakers online on YOOX United Kingdom - 11576635IL , Ruco Line Sandals - Women Ruco Line Sandals online on YOOX United Kingdom - 11333629VUSergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 44986771FP , Giuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11311774MX , Promotion Carhartt CMW6120 6" Boot , Quality First Gola Harrier 50 SuedeJoie Baeli Everyone has a sweet spot for carefree style. Satisfy your fashion cravings with these delectable Joie Baeli sandals , Giuseppe Zanotti Black Brown and Golden Sneaker Doble Zippers SneakersWOMEN Free People White Jackson Sneakers Different stylesladies Lanvin Multicolor Braided Slingback Sandals Good qualitylady Aquazzura Rebel Leather Sandals selling price
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.