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.Ebarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11457105KMBruschi Ankle Boot - Women Bruschi Ankle Boots online on YOOX United Kingdom - 11486894XA , SKECHERS Work Sure Track - Trickel , GIOSEPPO S015845329bmt SANDALIA PLANA DE MUJER , Céline Blue Turquoise Orange Beige Ivory Multicolor Stripe Canvas Espadrille Slipper Flats Sneakers , woman Tory Burch Sandals Modern mode , Dibrera By Paolo Zanoli Ankle Boot - Women Dibrera By Paolo Zanoli Ankle Boots online on YOOX United Kingdom - 11288899QURejois By Gianni Renzi Ankle Boot - Women Rejois By Gianni Renzi Ankle Boots online on YOOX United Kingdom - 11484121EMSaint-Honoré Paris Souliers Ballet Flats - Women Saint-Honoré Paris Souliers Ballet Flats online on YOOX United Kingdom - 11169222ME , Palomitas By Paloma Barceló Espadrilles - Women Palomitas By Paloma Barceló Espadrilles online on YOOX United Kingdom - 11102591ES , Tory Burch White Nora 50 Mm Wedge Sandals , women Chinese Laundry Multicolor Emeraldnvy Platforms Fashion pattern , ladies Fendi Black Suede Sandals First qualityMarcel Ostertag x Tamaris High heels , men's/women's Saucony Mirage 5 Sneakers & Athletic Saucony Impeccable , mens/womens Diadora 7-TRI TF Sneakers & Athletic Diadora realNike Sportswear AIR MAX 97 17 - Trainers , Birkenstock Sandals - Women Birkenstock Sandals online on YOOX United Kingdom - 11571536IO , Manila Grace Sandals - Women Manila Grace Sandals online on YOOX United Kingdom - 44995898AW , Nr Rapisardi Sandals - Women Nr Rapisardi Sandals online on YOOX United Kingdom - 11504876EI , Kallistè Ankle Boot - Women Kallistè Ankle Boots online on YOOX United Kingdom - 11361557CV , ujja4CCO PUMA Golf Ignite Statement LowNew design ECCO Dip Moc BoatSpecial price Birkenstock Gizeh Birkibuc™Quality queen Taryn Rose ReeseReputation first Spenco Supreme Slipper , Liu •Jo Shoes Ankle Boot - Women Liu •Jo Shoes Ankle Boots online on YOOX United Kingdom - 11233942CWMe Too Black Snake Skin Embossed Leather "Lovely" Slides SandalsWomen's Brown Leather Sandals/Wedges - Wedges Win highly appreciated , womens Sergio Rossi Orange Sandals official website ,
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.