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.Nero Giardini Ankle Boot - Women Nero Giardini Ankle Boots online on YOOX United Kingdom - 11489100MC , Sigerson Morrison Open-Toe Mules - Women Sigerson Morrison Open-Toe Mules online on YOOX United Kingdom - 11564656PTDune London Ballet Flats - Women Dune London Ballet Flats online on YOOX United Kingdom - 11476662EW , F.Lli Bruglia Court - Women F.Lli Bruglia Courts online on YOOX United Kingdom - 11518724BNShop ★ Art Sneakers - Women Shop ★ Art Sneakers online on YOOX United Kingdom - 11506226NHWOMENS Munro American Bronze Sandals Known for its beautiful quality , MISS Chelsea Crew Mustard Elyse Wedges Exquisite workmanshipJimmy Choo Brown Kitten Heel Slide Sandalswomens Miu Miu Brown/Orange Vintage Wedges auctionJ.LINDEBERG GRAIN - Trainers - bisons.Oliver High heeled ankle boots Colour: blackLowa TAURUS GTX - Walking boots - anthrazit/grünAdidas TOM TAILOR DENIM Ankle boots - coalMccaffrey Boots - Men Mccaffrey Boots online on YOOX United Kingdom - 11459590WTAsfvlt Sneakers - Men Asfvlt Sneakers online on YOOX United Kingdom - 11230439QWA.Testoni Sneakers - Men A.Testoni Sneakers online on YOOX United Kingdom - 11555580MUmen/women Nike Huarache 2KFilth Pro Low Sneakers & Athletic Nike wholesale , Giuseppe Zanotti Sneakers - Men Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11377677ET , Fratelli Rossetti Loafers - Men Fratelli Rossetti Loafers online on YOOX United Kingdom - 11440892IJCarrano Sandals - Women Carrano Sandals online on YOOX United Kingdom - 11268527NH , Spaziomoda Sneakers - Women Spaziomoda Sneakers online on YOOX United Kingdom - 11572991XIGioseppo Ankle Boot - Women Gioseppo Ankle Boots online on YOOX United Kingdom - 11035726TTSam Edelman Sandals - Women Sam Edelman Sandals online on YOOX United Kingdom - 11342446MR , Paloma Barceló Loafers - Women Paloma Barceló Loafers online on YOOX United Kingdom - 11347296KHGiuseppe Zanotti Court - Women Giuseppe Zanotti Courts online on YOOX United Kingdom - 11473589SO , UoB29ear Frye Lena Whip Zip LowGiuseppe Zanotti Nero Rw5093 Crystal Accented Suede/Leather Women's High Top Sneaker SneakersChristian Louboutin Silver White Metallic Costa Gomma 30mm Fringe Bow B000 Sandals , Manolo Blahnik Brown Camel Tan Suede Lisa Flower Heels Pumps , MISS Versace Collection Dsr149f Sandals Reliable performance ,
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.