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.Steve Madden Ankle Boot - Women Steve Madden Ankle Boots online on YOOX United Kingdom - 11467255EV , O.X.S. Rubber Soul Sneakers - Women O.X.S. Rubber Soul Sneakers online on YOOX United Kingdom - 11573467ERGiuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11567551AO , Dolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11154730UUPEPE JEANS Pms30484-pepe Jeans LOW-TOP TRAINERS , Moa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11580296DX , CLARKS Malvet Maria FASHION ANKLE BOOTS FOR WOMEN , Ladies Saint Laurent Tribute Sandals Platforms Excellent performanceman/woman Anne Klein Alphia Flats Sufficient supplymen/women Baretraps Kami Flats High security , mens/womens SKECHERS Highlanders Boots Good qualityGentle Souls by Kenneth Cole InkaReebok | Reebok Rapide MU Sneakers In Black CN5914man/woman Kenneth Cole Reaction Can-Didly Sneakers & Athletic Kenneth Cole Reaction qualityDiadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11536776DB , O.X.S. Boots - Women O.X.S. Boots online on YOOX United Kingdom - 11518542BCCesare Paciotti Court - Women Cesare Paciotti Courts online on YOOX United Kingdom - 11506909UJJessica Simpson Sandals - Women Jessica Simpson Sandals online on YOOX United Kingdom - 11479993ERMoschino Ankle Boot - Women Moschino Ankle Boots online on YOOX United Kingdom - 11451109DQCharlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11499994FKVersus Versace Sneakers - Men Versus Versace Sneakers online on YOOX United Kingdom - 11368153UUY5xWamfe La Sportiva Genesis Low GTX0XKu4oZV CALLAGHAN 12903.4 TRAINERS FOR MEN , LifeStride Mexico Whether it be a sundress or a comfy pair of jeans, the LifeStride Mexico sandal is ready to be worn with confidence! , Steven Ney Complete your look with these timeless Steven Ney heel.Ladies Brunello Cucinelli Cream Sneakers Sneakers Reasonable delivery and punctual deliveryValentino Black Leather and Calfhair Rockstud Ankle Strap Sandals , ladies Christian Louboutin Multicolor Sneakers Sneakers Excellent valueConverse Black Tan White Split Tongue SneakersTory Burch Gold New Savannah Wedge 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.