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.Saint G. Flip Flops - Women Saint G. Flip Flops online on YOOX United Kingdom - 11437876SOBlu|Barrett By Barrett Sneakers - Men Blu|Barrett By Barrett Sneakers online on YOOX United Kingdom - 11536654CP , Nike Metcon 4 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11551934CS , Sperry Top-Sider Striper Ll Cvo - Sneakers - Men Sperry Top-Sider Sneakers online on YOOX United Kingdom - 11221081KM , Nike Dark Grey/Volt Purple Free 5.0 Tr Fit 4 Sneakers , PAULA URBAN 2-258 BOTíN PLANO DE MUJER , men's/women's Nine West Juliander Heels Excellent quality , Cole Haan Pinch Grand Penny Loafermens/womens Iceberg Trainers Colour: gold Modern and elegant , ASOS DESIGN | ASOS Driving Shoes In Brown LeatherAdidas Love Moschino High-top trainers - fantasy color+ Melissa Luxury Shoes Anglomania + Melissa Aranha (Toddler) , mens/womens Nine West Kaylee Heels International big name , mens/womens Dr. Martens 1461 CO Oxfords Known for its good quality , men/women Ben Sherman Jayme Sneakers & Athletic Ben Sherman Special purchaseConverse | Converse Chuck Taylor All Star core black ox sneakers , Roberto Botticelli Sneakers - Men Roberto Botticelli Sneakers online on YOOX United Kingdom - 11405668NE , man/woman Pearl Izumi X-Road Fuel IV Sneakers & Athletic Pearl Izumi Most practical , Natan Court - Women Natan Courts online on YOOX United Kingdom - 11481377MA , Strategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11239561TNButtero® Ankle Boot - Women Buttero® Ankle Boots online on YOOX United Kingdom - 11474456NC , Stuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11126431QC , Spaziomoda Ballet Flats - Women Spaziomoda Ballet Flats online on YOOX United Kingdom - 11448289WQAndrea Catini Sandals - Women Andrea Catini Sandals online on YOOX United Kingdom - 11444938HCSeasonal hot sale Jessica Simpson Dalyn 3Aquatalia Alaric Summer relaxin' looks real good in the Aquatalia® Alaric sneakers , lady Alexandre Birman Strappy Sandals Highly appreciated and widely trusted in and outChristian Louboutin Brown Leopard Python Pik Boat Sneakers SneakersWomen's Joan & David Black Platforms Easy to handle , Tory Burch Cassia French Calf Thong Sandals ,
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.