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.Poesie Veneziane Ankle Boot - Women Poesie Veneziane Ankle Boots online on YOOX United Kingdom - 11454730MJ , Andrea Ventura Firenze Loafers - Men Andrea Ventura Firenze Loafers online on YOOX United Kingdom - 11441759KOman/woman SeaVees Army Issue High Wintertide Sneakers & Athletic SeaVees Known for its good quality , Vivian Ballet Flats - Women Vivian Ballet Flats online on YOOX United Kingdom - 11506569KQ24HORAS 23657 WEDGE-HEEL SANDALS FOR WOMEN , TSUGI JUN Colour Shift Women's Sneakers | CERULEAN-Peacoat-Puma White , Me+ By Marc Ellis Ankle Boot - Women Me+ By Marc Ellis Ankle Boots online on YOOX United Kingdom - 11471245PK , Tory Burch Blond Lowell 2 Veg Nappa Leather 45mm Sandalswomens Via Spiga Taupe Patent Wedges Carefully selected materialsWOMEN Boden Blue/Green Tricolor Platforms Very good colorWOMENS Valentino Red Jelly Bow Sandals Quality first , TRUE HEART S017000122baf BOTA OUTDOOR PARA MUJERCruyff REVOLT - Trainers - blackmen's/women's Sbicca Prismatic Boots Wear resistant , flip*flop HOMESTAY WORDS - Slippers , men's/women's River Island Slip-ons Colour: brown Speed ??refundLumberjack Sneakers - Men Lumberjack Sneakers online on YOOX United Kingdom - 11559077OX , Tod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11484453UU , men/women ASICS Cael? V7.0 Sneakers & Athletic ASICS At an affordable price , Mascaró Court - Women Mascaró Courts online on YOOX United Kingdom - 11513634TBFiorentini+Baker Ankle Boot - Women Fiorentini+Baker Ankle Boots online on YOOX United Kingdom - 11537164PA , Philipp Plein Loafers - Women Philipp Plein Loafers online on YOOX United Kingdom - 11543866QU , Effetti Personali Sneakers - Women Effetti Personali Sneakers online on YOOX United Kingdom - 11467950SCGianfranco Lattanzi Sneakers - Women Gianfranco Lattanzi Sneakers online on YOOX United Kingdom - 11547221FUlZb1D1Kk Finn Comfort Tunis - 81511 , high quality product Tommy Bahama Aoenian RelaxologyOluKai Hamakua Born from the bold landscape of the Big Island, the OluKai Hamakua boot offers unsurpassed comfort and crafted style!Giuseppe Zanotti Black New Men Croc Embossed Leather Zipper High-top Sneaker Eu 42 SneakersSaint Laurent White Ysl Thong Toe Wedge Flip Flops SandalsBalenciaga Pink Nude Glove Bootie Seen On Rihanna Sandals ,
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.