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.Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11486525KM , Valentino Garavani Ankle Boot - Women Valentino Garavani Ankle Boots online on YOOX United Kingdom - 11573903WLPuma Suede Classic Nyc - Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11444657CUKeb Ankle Boot - Women Keb Ankle Boots online on YOOX United Kingdom - 11244731PA , Elena Iachi Sneakers - Women Elena Iachi Sneakers online on YOOX United Kingdom - 11261307LESteve Madden Loafers - Women Steve Madden Loafers online on YOOX United Kingdom - 11480444HH , Pretty Ballerinas Navy / RedOvye' By Cristina Lucchi Ankle Boot - Women Ovye' By Cristina Lucchi Ankle Boots online on YOOX United Kingdom - 11456507JLRick Owens X Adidas Boots - Men Rick Owens X Adidas Boots online on YOOX United Kingdom - 11495179SK , LACOSTE 29spj0112 Riberac 21g Wht-wht LOW-TOP TRAINERS FOR WOMEN , men/women Nine West Jerrika Heels fashionable , Nine West Moretalkn - Wide Shaft , men/women Kenneth Cole New York Genevive Boots Sales ItalyDiadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11506256AE , men/women Not Rated Keep The Peace Sandals Ideal gift for all occasionsmen's/women's Joe's Jeans Dover Flats Make full use of materialsRoberto Cavalli Loafers - Men Roberto Cavalli Loafers online on YOOX United Kingdom - 11551409JR , Roberto Cavalli Loafers - Men Roberto Cavalli Loafers online on YOOX United Kingdom - 11347361AC , Garrice Sandals - Women Garrice Sandals online on YOOX United Kingdom - 11561654HSMat:20 Court - Women Mat:20 Courts online on YOOX United Kingdom - 11514067KC , Salomon Sneakers - Women Salomon Sneakers online on YOOX United Kingdom - 11399378LWGiuseppe Zanotti Boots - Women Giuseppe Zanotti Boots online on YOOX United Kingdom - 11312132RJ , Trussardi Jeans Sneakers - Women Trussardi Jeans Sneakers online on YOOX United Kingdom - 11175207PUToni Pons Boots - Women Toni Pons Boots online on YOOX United Kingdom - 11269440JB , BzEPLIfe Kenneth Cole Reaction Cellar MonkNew design Oboz Juniper Mid BDryUnlisted by Kenneth Cole Black Yellow Green Neutral M Very Good Condition Sandals , women Steve Madden Sparkly Sandals Strong heat and heat resistanceladies BC Footwear Navy Wedges German OutletsMISS Banana Republic Green/Multi Platforms Reliable quality
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.