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.Converse All Star Sneakers - Men Converse All Star Sneakers online on YOOX United Kingdom - 11327708FJ , Saucony Shadow Original - Sneakers - Men Saucony Sneakers online on YOOX United Kingdom - 11340877DKLeonardo Iachini Sneakers - Women Leonardo Iachini Sneakers online on YOOX United Kingdom - 11460511XJ , Giuseppe Zanotti Safety Pin Slipon Sneakers , 01000010 By Boccaccini Ankle Boot - Women 01000010 By Boccaccini Ankle Boots online on YOOX United Kingdom - 11499739BMPlein Sport Runner Cindy - Sneakers - Women Plein Sport Sneakers online on YOOX United Kingdom - 11292612PESteve Madden Jasmine Sandal - Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11436618PV , Donald J. Pliner Olive Kinky Kitten Heel Slides SandalsALMA EN PENA 226 THIGH BOOTS FOR WOMENWOMEN Saint Laurent Python Tan Sneakers Cheap ideal , UNISA Wence Lmt-unisa FASHION SANDALS FOR WOMEN , AEROSOLES Chair Metting SANDALIA PLANA DE MUJER , men/women Adidas Women's Edgebounce Shoes Schuhe value , Paloma Barceló Classic ankle boots Colour: desert/white/red , Vagabond ZOE - Ankle boots Colour: blackBalta leather sandals , gold-coloured, Les Tropeziennes Par M.Belarbiadidas Originals | adidas Originals N-5923 Sneakers In OrangeHudson London SONAM - Classic ankle boots Colour: blackAir max motion racer trainers , black/grey, Nike , Dior Sandals - Women Dior Sandals online on YOOX United Kingdom - 11271466PIRaparo Boots - Men Raparo Boots online on YOOX United Kingdom - 44627787EIJ.J. Loafers - Men J.J. Loafers online on YOOX United Kingdom - 11557473PH , men's/women's Alice + Olivia Agnes Heels Known for its excellent qualityBikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 11449823UC , Lumberjack Sneakers - Women Lumberjack Sneakers online on YOOX United Kingdom - 11505823OLAttilio Giusti Leombruni Navy/Black Multi Color Woven Water Straw Slip On Shoes~39.5 Sneakers , Women's Crystal and Black Satan Sandals Known for its excellent qualitywomen Christian Louboutin Black Aborina Platforms Elegant and stable packaging , WOMENS Dior Stellar Rainbow Formal Shoes Used in durabilityLADY Giuseppe Zanotti Cloisonne Platforms Qualified production ,
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.