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.Alexander Hotto Ankle Boot - Women Alexander Hotto Ankle Boots online on YOOX United Kingdom - 11486442CUOscar Tiye Ankle Boot - Women Oscar Tiye Ankle Boots online on YOOX United Kingdom - 11455536QE , Le Silla Ankle Boot - Women Le Silla Ankle Boots online on YOOX United Kingdom - 11532099INcS2wgAUP Men/Women Naturalizer Tanita Boots wholesaleokDtDQne men/women Joie Cain Flats Amoy , Cinzia Soft By Mauri Moda Sandals - Women Cinzia Soft By Mauri Moda Sandals online on YOOX United Kingdom - 11547073CQLiu ?Jo Shoes Flip Flops - Women Liu ?Jo Shoes Flip Flops online on YOOX United Kingdom - 11281652DJSgn Giancarlo Paoli Loafers - Women Sgn Giancarlo Paoli Loafers online on YOOX United Kingdom - 11251403CJWomen's Vince Grey Addie Heeled Sandals Let our goods go out into the world , LADY Tory Burch Linen Filipa Wedges Big clearance saleDansko Black Manda Leather Buckle Ankle Strap Sandals , Prada Black Classic L Italy Leather Sandalsmen's/women's s.Oliver Over-the-knee boots Colour: grey best sellermens/womens CAFèNOIR Slip-ons Colour: nero Aesthetic appearance , Birkenstock Sandals - Men Birkenstock Sandals online on YOOX United Kingdom - 11570560BFHummel Sneakers - Men Hummel Sneakers online on YOOX United Kingdom - 11502319LN , Versace Collection Sneakers - Men Versace Collection Sneakers online on YOOX United Kingdom - 11461058CP , Nike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11398098KJCasadei Court - Women Casadei Courts online on YOOX United Kingdom - 11188334XE , Womsh Sneakers - Women Womsh Sneakers online on YOOX United Kingdom - 11508640UE , Fratelli Rossetti Court - Women Fratelli Rossetti Courts online on YOOX United Kingdom - 11440598FMAngelo Pallotta Loafers - Men Angelo Pallotta Loafers online on YOOX United Kingdom - 11568739EN , Impeccable New Balance Classics AM331v1 , Kork-Ease Brystal Update your timeless look with the stylish Kork-Ease Brystal mary-jane flat , ALDO Eliressi Modern meets timeless style in the ALDO Eliressi derby shoe , Ash Snake Embossed Leather Khaki/Coral Love Fashion Sneakers Sneakerslady Fendi Multicolor Sandalo Formal Shoes Professional design , MISS Rachel Zoe Daria Platforms Easy to handleWomen's Annie Red And Rhinestones Sandals Good design , lady Christian Louboutin White/Beige White/Beige Wedges Discount ,
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.