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.Janet & Janet Sandals - Women Janet & Janet Sandals online on YOOX United Kingdom - 11399526OCDivine Follie Ankle Boot - Women Divine Follie Ankle Boots online on YOOX United Kingdom - 11562856BE , Khrio' Ankle Boot - Women Khrio' Ankle Boots online on YOOX United Kingdom - 11477625AJLadies Brown Suede Charlize Wedges tender , qP33OX8d man/woman ALDO Forquer-U Heels TrendyTommy Hilfiger Crackled Metallic Heeled Boot - Ankle Boot - Women Tommy Hilfiger Ankle Boots online on YOOX United Kingdom - 11567731CLK.Jacques St. Tropez Flip Flops - Women K.Jacques St. Tropez Flip Flops online on YOOX United Kingdom - 11475700RGLa Via Del Mare Sandals - Women La Via Del Mare Sandals online on YOOX United Kingdom - 11303904RL , Puma Platform Trace Strap Wn's - Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11541320OU , RIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja903s42-negro WEDGE-HEEL SANDALS FOR WOMEN , LA STRADA 702910 ZAPATO DE FIESTA PARA MUJERNEW BALANCE Wr996 LOW-TOP TRAINERS FOR WOMEN , Men/Women Katy Perry The Grace Boots Queensland , Adidas CAFèNOIR T-bar sandals - nero , Gentle Souls by Kenneth Cole Larisa , Onitsuka Tiger ULTIMATE 81 - Trainers - caravan/midnight blue , Homers DANY - Classic ankle boots Colour: crosta sirenaSimply Be WIDE FIT ESTEE - Classic heels , mens/womens Missoni Scrunch Ballet Flat Flats Quality queenVagabond | Vagabond Grace Black Leather Ankle Boots , Keep Boots - Men Keep Boots online on YOOX United Kingdom - 11548002SC , Sergio Rossi Sandals - Men Sergio Rossi Sandals online on YOOX United Kingdom - 11412485PC , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11462373QBRed(V) Espadrilles - Women Red(V) Espadrilles online on YOOX United Kingdom - 11267253UA , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11336412UJPantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11569927KKTory Burch Snake Print Mira SandalsWOMEN Isola Black Sandals Year-end salesSaint Laurent Black and Red Colorblocked High-top Sneakers Mens Eu Sz-42 SneakersMISS Jeffrey Campbell Camel Borgia Sandals First class in his class ,
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.