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.Windsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11523234OS , Sexy Woman Open-Toe Mules - Women Sexy Woman Open-Toe Mules online on YOOX United Kingdom - 11564601EBDolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11327502BOLea Foscati Sandals - Women Lea Foscati Sandals online on YOOX United Kingdom - 11475618CAPlatform Trace Strap Women’s Sneakers | Puma Black-Puma Black , Vans Men's Sk8-Hi Reissue V Trainers, Black blackJc Play By Jeffrey Campbell Sneakers - Women Jc Play By Jeffrey Campbell Sneakers online on YOOX United Kingdom - 11125948UH , Space Style Concept Sneakers - Women Space Style Concept Sneakers online on YOOX United Kingdom - 11523302QAWOMEN Tory Burch Black Amalie Sandals Moderate priceMenbur High heeled sandals Colour: opal blueMen/Women Tahari Ponder Heels Reputation first , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11483273KR , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11565107HW , Devon Boots - Men Devon Boots online on YOOX United Kingdom - 11557580MUAvirex Boots - Men Avirex Boots online on YOOX United Kingdom - 11491578BP , mens/womens Jessica Simpson Dinellia Sneakers & Athletic Jessica Simpson Shopping promotion , CMP RIGEL MID TREKKING SHOES WP - Walking boots Colour: arabica/sand , men/women A2 by Aerosoles Ink Pad Heels Sales online storemen's/women's MUK LUKS Marsha Sandals Highly praised and appreciated by the consumer audience , Red(V) Sandals - Women Red(V) Sandals online on YOOX United Kingdom - 11475619II , Measponte® Court - Women Measponte® Courts online on YOOX United Kingdom - 11543131LI , Punto Pigro Boots - Women Punto Pigro Boots online on YOOX United Kingdom - 11543404LPDurable service Cobian Draino 2Aetrex Piper Enjoy the warm weather in pure style and comfort with the easy-wearing Aetrex Piper sandal! , Woolrich Meera Dress up your winter look with the stylish warmth of the Woolrich Meera boot , Supra Factor Walk on clouds with the dynamic fit of the Supra Factor training shoe!Harley-Davidson Bowden The Harley-Davidson Bowden riding boot has the durability and comfort to keep you going mile after mile on those long trips on the road.MISS Marc Jacobs Beige (Metallic) Sandals Quality and quantity guaranteed , LADY Tory Burch Biege Wedges environmentally friendlywomens Splendid Black-el Congo Sandals special offer ,
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.