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.The Seller Ankle Boot - Women The Seller Ankle Boots online on YOOX United Kingdom - 11292718UW , Gianvito Rossi Ballet Flats - Women Gianvito Rossi Ballet Flats online on YOOX United Kingdom - 11524491CXman/woman SeaVees 05/66 Hawthorne Clipper Class Sneakers & Athletic SeaVees A balance between toughness and hardness , Camper Runner Four - Sneakers - Men Camper Sneakers online on YOOX United Kingdom - 11434379AF , ladies Tan Leather Sandals Good design , Liu •Jo Shoes Sneakers - Women Liu •Jo Shoes Sneakers online on YOOX United Kingdom - 11359899MC , Steve Madden Century Ankleboot - Ankle Boot - Women Steve Madden Ankle Boots online on YOOX United Kingdom - 11436592US , Marc By Marc Jacobs Sandals - Women Marc By Marc Jacobs Sandals online on YOOX United Kingdom - 11117164AA , Moa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11580245DQNATALIA BLANCO Sandalia Natalia Blanco De Piel Negra 76271c6 WEDGE-HEEL SANDALS FOR WOMENMARIA MARE 66819 C34962 Coco Blanco SANDALIA PLANA DE MUJERCORONEL TAPIOCCA C-111-33 BOTíN PLANO DE MUJER , Giuseppe Zanotti May London Thunder Mid Top Sneaker , man/woman L.K. Bennett Matilde Heels Easy life , New Look MARLE RUNNER - Trainers , man/woman Rieker R3448 Liv 48 Boots Excellent craft , man/woman Cole Haan Anica Crisscross Sandal Sandals Non-slipGeox Loafers - Men Geox Loafers online on YOOX United Kingdom - 44662206FT , A.Testoni Boots - Men A.Testoni Boots online on YOOX United Kingdom - 11543729TGP448 Sneakers - Men P448 Sneakers online on YOOX United Kingdom - 11551270SP , Loeffler Randall JADE KITTEN HEEL MULE WITH BOW - Classic heelsman/woman Dolce Vita Tava Sneakers & Athletic Dolce Vita Brand , Tatoo Court - Women Tatoo Courts online on YOOX United Kingdom - 11537498RVCarmens Boots - Women Carmens Boots online on YOOX United Kingdom - 11548308EX , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11566606GT , Sales online store El Naturalista Yggdrasil NE23 , Wholesale trade Chinese Laundry Rubie , Vaneli Adora The Adora loafer offers you a classic design for any occasion. , Saint Laurent Pink and Black Pinaskullada Slip-on Sneakerslady Lucca Navy Off White Pumps Modern mode ,
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.