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.Le Blanc Ankle Boot - Women Le Blanc Ankle Boots online on YOOX United Kingdom - 11467960AM , Emporio Armani Loafers - Women Emporio Armani Loafers online on YOOX United Kingdom - 11239826HCChocolà Ankle Boot - Women Chocolà Ankle Boots online on YOOX United Kingdom - 11528899OKdfuaXTMQ Men/Women Kamik Fieldman Boots elegantSee By Chloé Ankle Boot - Women See By Chloé Ankle Boots online on YOOX United Kingdom - 11075965PMWOMEN Ash White Kurt Perforated Platforms Louis, in detaillady Zara Blue Wedge Sneakers Sneakers Carefully selected materialsIsabel Marant Khaki (Green) Bekett Suede Wedge SneakersLauren Ralph Lauren Navy Blue Jolie Sneakers , mens/womens French Sole Padre Flats Acknowledgement feedbackMen/Women L.K. Bennett Mary Jane Flats Attractive and durableman/woman Rocket Dog Leon Heels At a lower priceTod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11557667PC , Barracuda Sneakers - Men Barracuda Sneakers online on YOOX United Kingdom - 11416177PL , Geox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11454046AXmens/womens Dunham Trukka Alpine Waterproof Boots A balance between toughness and hardnessGiuseppe Zanotti Sandals - Men Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11371262GSadidas Performance NEMEZIZ 18.2 FG - Moulded stud football boots - blue/footwear whitemen/women The FLEXX Sneak Name Sneakers & Athletic The FLEXX King of quantity , Emanuela Passeri Court - Women Emanuela Passeri Courts online on YOOX United Kingdom - 11331791NJ , High-quality Josef Seibel Rose 27 , Known for its beautiful quality New Balance MCH896v2 , Harley-Davidson Watkins Always be ready for a good ride with the modern comfort and long-lasting style of the Harley-Davidson Watkins riding shoeNaturalizer Blakely Be bold and break from the mold in the beautiful Blakey pump from NaturalizerBlundstone BL1446 The Blundstone BL1446 is a beautifully detailed boot with a rich leather construction and reliable traction to keep you feeling stylish and secure all day long. , Women's Burberry Blue Gauden Slip Sneakers Let our goods go out into the world , Prada Black Leather & Logo Sz: M Heels SandalsLADY Nike Zoom Pegasus 32 Sneakers Modern technologyAlexander McQueen Black and White Sneakers Sneakers , Vans Blue Blue/Bell Off The Wall Sneakers ,
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.