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.Valentino Garavani Ballet Flats - Women Valentino Garavani Ballet Flats online on YOOX United Kingdom - 11539285UPLkZIeXh8 Citilane clogs , purple/white, Crocs , Platform Trace Mimicry Women’s Sneakers | Vanilla Cream-Vanilla Cream | PUMA Platforms | PUMA United States , Blue Les Copains Ballet Flats - Women Blue Les Copains Ballet Flats online on YOOX United Kingdom - 11536016KEDiadora Heritage Trident S Sw - Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11368835MM , Reebok Dmx Run 10 Gum - Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11565719CDWOMEN Michael Antonio Brown Gaphnee Sandals For your choiceLOIS 85606 200 Oro LOW-TOP TRAINERS FOR WOMEN , RELAXSHOE 182-130 WEDGE ANKLE BOOTS FOR WOMEN , CLARKS Bellevue Cedar ZAPATO PLANO PARA MUJER , Men/Women Dolce Vita Eva Heels TRUEAdidas ALDO ERAYLIA - Ankle boots - black , mens/womens Born McMillan Boots At a lower pricemens/womens J. Renee Camley Heels Big clearance salemen/women Tommy Hilfiger Yavino Heels Fashion versatile shoes , Etnies Sneakers - Men Etnies Sneakers online on YOOX United Kingdom - 11473866QM , D-S!De Sneakers - Men D-S!De Sneakers online on YOOX United Kingdom - 11291568UA , Birkenstock Sandals - Men Birkenstock Sandals online on YOOX United Kingdom - 11576823FS , men/women Soludos Elba Sandal Sandals Pick up at the boutiqueBlumarine Sneakers - Women Blumarine Sneakers online on YOOX United Kingdom - 11526021XHBarracuda Loafers - Women Barracuda Loafers online on YOOX United Kingdom - 11079817WM , Fitflop Loafers - Women Fitflop Loafers online on YOOX United Kingdom - 11474558TU , Buttero® Ankle Boot - Women Buttero® Ankle Boots online on YOOX United Kingdom - 11081508IADivine Follie Sandals - Women Divine Follie Sandals online on YOOX United Kingdom - 11570390TVSteve Madden Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11355285UQLoretta Pettinari Loafers - Women Loretta Pettinari Loafers online on YOOX United Kingdom - 11494361FP , Giorgio Brato Sneakers - Men Giorgio Brato Sneakers online on YOOX United Kingdom - 11461597HIPrada Tan Leather 1 3/4" Kitty Heel Tassel Mules SandalsWomen's Stella McCartney Beige 372515 Wedges selling pricewomens N°21 Black/White Platform Sandals For your choice ,
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.