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.Vivien Lee Loafers - Women Vivien Lee Loafers online on YOOX United Kingdom - 11491639LO , INTERBIOS 8287 WEDGE-HEEL SANDALS FOR WOMEN , Vans Sneaker Washed Denim Stars Sneakers , O6 The Gold Edition Ankle Boot - Women O6 The Gold Edition Ankle Boots online on YOOX United Kingdom - 11464140IU , Liu ?Jo Shoes Ankle Boot - Women Liu ?Jo Shoes Ankle Boots online on YOOX United Kingdom - 11532997VR , Mm6 Maison Margiela Ankle Boot - Women Mm6 Maison Margiela Ankle Boots online on YOOX United Kingdom - 11492480SPWOMENS Hot Kiss Black Formal Shoes Modern designmen/women Sesto Meucci Gift Loafers Latest styles , Kappa TARO - Walking trainers , Onitsuka Tiger by Asics Gel-Lyte MT , men's/women's Florsheim Pascal Cap Toe Oxford Oxfords flagship store , Alyx Boots - Men Alyx Boots online on YOOX United Kingdom - 11566637KDO.X.S. Sneakers - Men O.X.S. Sneakers online on YOOX United Kingdom - 11533252VV , A.Testoni Sneakers - Men A.Testoni Sneakers online on YOOX United Kingdom - 11555458TACalpierre Loafers - Men Calpierre Loafers online on YOOX United Kingdom - 11460453TL , Primabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11385525OLTod's Boots - Men Tod's Boots online on YOOX United Kingdom - 11443381MAman/woman Roper Skipper Too Sneakers & Athletic Roper Quality and quantity guaranteedRoberto Botticelli Sneakers - Men Roberto Botticelli Sneakers online on YOOX United Kingdom - 11512668DI , Cafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11571977OT , Geox Ankle Boot - Women Geox Ankle Boots online on YOOX United Kingdom - 11356415BSSalvatore Ferragamo Sneakers - Women Salvatore Ferragamo Sneakers online on YOOX United Kingdom - 11556150EP , New Balance Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11569851BMMarcelo Burlon Sneakers - Women Marcelo Burlon Sneakers online on YOOX United Kingdom - 11355361RKGiordana F. Loafers - Women Giordana F. Loafers online on YOOX United Kingdom - 11458364LV , U1iQwv97 Hush Puppies Lyricale Quarter StrapClergerie Salvy Lend a sophisticated shine to your ensemble with the Robert Clergerie Salvy Sneaker , Christian Louboutin Gondolastrass Burgundy Bronze Strass Sneakers Trainers Flats 39 Sneakers , Salvatore Ferragamo Blush Nude Leather Strap Double Logo Buckle Blockheel SandalsGiuseppe Zanotti Brown Leather Coral Crystal 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.