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.Roberto Del Carlo Court - Women Roberto Del Carlo Courts online on YOOX United Kingdom - 11037414HC , Sam Edelman Boots - Women Sam Edelman Boots online on YOOX United Kingdom - 11446952NW , Docksteps Ankle Boot - Women Docksteps Ankle Boots online on YOOX United Kingdom - 11477815QBLotto Leggenda Tokyo Shibuya W - Sneakers - Women Lotto Leggenda Sneakers online on YOOX United Kingdom - 44881904EL , Mr & Mrs Yuo Sneakers - Women Mr & Mrs Yuo Sneakers online on YOOX United Kingdom - 11536663AITosca Blu Shoes Court - Women Tosca Blu Shoes Courts online on YOOX United Kingdom - 11326345AC , MARIA MARE 67003 C39372 Plata WEDGE-HEEL SANDALS FOR WOMENMTNG 93629 Sprinter Habana Rosa BOTA OUTDOOR PARA MUJERwomen Tory Burch Black Sandals Average costs , Columbia BIG WATER - Walking sandals , Pier One Classic ankle boots Colour: black , Garina trainers , silver-coloured, Kaporal 5Dr. Martens Work Leah Steel Toemen/women Sol Sana Ginny Mule Clogs & Mules a variety of , adidas Originals | adidas Originals Deerupt Runner Sneakers In White CQ2629 , Alberto Guardiani Sneakers - Men Alberto Guardiani Sneakers online on YOOX United Kingdom - 11568129HL , Springa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11169593XB , Superga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11548417XJ , Cafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11208055HN , Tom Ford Sandals - Women Tom Ford Sandals online on YOOX United Kingdom - 11515058VX , Weg Ankle Boot - Women Weg Ankle Boots online on YOOX United Kingdom - 11578430WN , Salvatore Ferragamo Court - Women Salvatore Ferragamo Courts online on YOOX United Kingdom - 11505200MULola Cruz Sneakers - Women Lola Cruz Sneakers online on YOOX United Kingdom - 11547728RG , Paul Smith Sneakers - Men Paul Smith Sneakers online on YOOX United Kingdom - 11465575KS , naDaOSbD BRUNATE 31439 WEDGES FOR WOMEN , Saucony Ideal Up your style and performance whether you're in the gym or on the streets, in the Saucony Ideal running shoeBorn Piper The Born Piper sneaker creates a sense of casual sophistication you can wear all-day long!Abro⁺ Ankle Boot - Women Abro⁺ Ankle Boots online on YOOX United Kingdom - 11403274AXwoman Modern Vintage Ivory Strap Wedges German Outlets , LADY Dolce Vita Black Sandals Average costs ,
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.