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.Fabbrica Deicolli Ankle Boot - Women Fabbrica Deicolli Ankle Boots online on YOOX United Kingdom - 11500993PN , V Italia Sneakers - Women V Italia Sneakers online on YOOX United Kingdom - 11171069MONicola Barbato Loafers - Women Nicola Barbato Loafers online on YOOX United Kingdom - 11467195BGKt8xMPxc Men/Women Rieker D1298 Boots valueOvye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11336072FAwomens Steve Madden Pink Wedges Suitable for colorSergio Rossi Black/White 38.5/8 Black/White High Sandalsmens/womens Sanuk Donny Loafers Year-end special promotions , Men/Women Mezlan 16030 Loafers Human borderBirkenstock ARIZONA - Mules Colour: navySKECHERS Street Double Up - Duvet , ASICS KANMEI 2 - Neutral running shoes - carbon , men/women The FLEXX A Land Lone Boots Upper materialSuperga® Sneakers - Men Superga® Sneakers online on YOOX United Kingdom - 11272629ED , Etro Loafers - Men Etro Loafers online on YOOX United Kingdom - 11434625MRAdidas Reebok Classic PHASE 1 PRO - Trainers - spirit white/white , man/woman Clergerie Guepev Boots We have won praise from our customers.Roberto Cavalli Sneakers - Men Roberto Cavalli Sneakers online on YOOX United Kingdom - 11538946GP , Armani Jeans Sneakers - Men Armani Jeans Sneakers online on YOOX United Kingdom - 11441690QKAteliers Heschung Boots - Men Ateliers Heschung Boots online on YOOX United Kingdom - 11540444GI , Camper Loafers - Women Camper Loafers online on YOOX United Kingdom - 11529237SR , Allooora Court - Women Allooora Courts online on YOOX United Kingdom - 11216663RRD.A.T.E. Sneakers - Women D.A.T.E. Sneakers online on YOOX United Kingdom - 11378101JKStrategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11515892UQ , Manuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11332192EJ , Alaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11502299OA , Charlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11488580WU , New design Imagine Vince Camuto Regin , adidas NMD_XR1 With innovative comfort and on-trend street-style, the NMD_XR1 steps up your game on every levelVans Black/White/Pewter Black/Pewter Polka Dots Classic Slip-on Sneakers ,
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.