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.Clarks Originals Ankle Boot - Women Clarks Originals Ankle Boots online on YOOX United Kingdom - 11545737AQ , The Seller Sandals - Women The Seller Sandals online on YOOX United Kingdom - 11503233RTPropet Four Points Mid II Waterproofwomen Building Block Sandals Modern technology1JfbONFS Men/Women UNIONBAY Elegant Sandals fashionable , Fila Heritage Original Fitness Metallic Low Wmn - Sneakers - Women Fila Heritage Sneakers online on YOOX United Kingdom - 11492799DFladies Christian Louboutin Multicolor Wedges We have received praise from our customers.women Salvatore Ferragamo Multi-color 1356 Sandals Carefully selected materials , lady BCBGMAXAZRIA Silver Ma-maven Formal Shoes Bright colors , Adidas DNA Footwear BV High heeled sandals - blush , men's/women's mint&berry Wedge sandals Colour: cognac uniquemen/women Kenneth Cole Reaction Left Side Oxfords durabilitymen's/women's Massimo Matteo Moc Toe Bit Loafers cheapestASICS GEL NIMBUS 20 STOCKHOLM MARATHON - Neutral running shoes Colour: flash yellowMen/Women Diadora N9000 III Sneakers & Athletic Diadora online shop , Angelo Pallotta Boots - Men Angelo Pallotta Boots online on YOOX United Kingdom - 11500245QL , Ebarrito Sandals - Women Ebarrito Sandals online on YOOX United Kingdom - 11560011FN , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11556425FX , Mexicana Ankle Boot - Women Mexicana Ankle Boots online on YOOX United Kingdom - 11527677LH , Vivien Ankle Boot - Women Vivien Ankle Boots online on YOOX United Kingdom - 11514274EIPatrizia Pepe Sandals - Women Patrizia Pepe Sandals online on YOOX United Kingdom - 11431994OR , Opening Ceremony Sneakers - Women Opening Ceremony Sneakers online on YOOX United Kingdom - 11465862QISusana Traca Sandals - Women Susana Traca Sandals online on YOOX United Kingdom - 11550346JELaurence Dacade Sandals - Women Laurence Dacade Sandals online on YOOX United Kingdom - 11494383KMwomens J.Crew Formal Shoes Comfortable touchwRtPHhPi Steve Madden Featherl Loafer Flat , Reasonable price adidas Adilette Cloudfoam Mono , Most practical Wilson Rush Open 2.0 , B. Makowsky Black Suede Leather Tan Topstitch Triangle Stack Wood Heels From Double Bow SandalsWOMENS Vince Camel Suede Sandals We have received praise from our customers.
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.