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.Converse Limited Edition Sneakers - Women Converse Limited Edition Sneakers online on YOOX United Kingdom - 11513126KSStampd X Puma Sneakers - Men Stampd X Puma Sneakers online on YOOX United Kingdom - 11326777AUPuma Tsugi Jun Ns - Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11566881VH , Impo Neutral White Pink New Sandals , Pas De Rouge Ankle Boot - Women Pas De Rouge Ankle Boots online on YOOX United Kingdom - 11512830HPNew Balance 996 Suede - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11393106OF , Janet & Janet Loafers - Women Janet & Janet Loafers online on YOOX United Kingdom - 11250712XK , man/woman Pikolinos Ordino W8M-9596 Boots Reputation first , Garina trainers , shimmering black, Kaporal 5Men/Women Walking Cradles Dani Heels Trendy , Converse | Converse Chuck '70 Hi Sneakers In CreamAdidas Vagabond GRACE - Platform boots - bordoPS by Paul Smith ACOSTA - Classic ankle boots - blackRoberto Cavalli Loafers - Men Roberto Cavalli Loafers online on YOOX United Kingdom - 11517318CH , Gaimo Sandals - Women Gaimo Sandals online on YOOX United Kingdom - 11380804JN , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11122301UUMarella Sandals - Women Marella Sandals online on YOOX United Kingdom - 11372682QACafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11337012SG , Skechers Sneakers - Women Skechers Sneakers online on YOOX United Kingdom - 11554837HJDocksteps Ankle Boot - Women Docksteps Ankle Boots online on YOOX United Kingdom - 11522025PXHannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11541927RHEmanuela Passeri Sandals - Women Emanuela Passeri Sandals online on YOOX United Kingdom - 11571923BNPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11212918RE , Bottega Veneta Loafers - Women Bottega Veneta Loafers online on YOOX United Kingdom - 11489937TRCross Walk Court - Women Cross Walk Courts online on YOOX United Kingdom - 11335852WLFamous store The FLEXX Crossover , Robert Clergerie Raffia Tan and Black Frazziap Natural Platform Sandalswomen Via Spiga Nude/Beige Cork Wedges Different styles and styles , womens Saint Laurent Black Suede Platforms Has a long reputation , lady Gianni Bini Silver Sandals High quality and low effort ,
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.