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.Isabelle Paris Court - Women Isabelle Paris Courts online on YOOX United Kingdom - 11456688MNManila Grace Denim Sandals - Women Manila Grace Denim Sandals online on YOOX United Kingdom - 44995804SW , Cesare Paciotti 4Us Sneakers - Women Cesare Paciotti 4Us Sneakers online on YOOX United Kingdom - 11386834AX , Stuart Weitzman Ankle Boot - Women Stuart Weitzman Ankle Boots online on YOOX United Kingdom - 11488073JQDonna Più Loafers - Women Donna Più Loafers online on YOOX United Kingdom - 11511501BB , E...Vee Ankle Boot - Women E...Vee Ankle Boots online on YOOX United Kingdom - 11491062PKSenso Ankle Boot - Women Senso Ankle Boots online on YOOX United Kingdom - 11471100GH , Golden Goose Deluxe Brand Black Classic 2.12 Col White Star and Glitter Leather High-top Sneakers Sneakers , Converse Cons Pro Leather Vulc Mid Canvas Distressed - Sneakers - Men Converse Cons Sneakers online on YOOX United Kingdom - 11216415JE , Oscar De La Renta Sandals - Women Oscar De La Renta Sandals online on YOOX United Kingdom - 11326733KFNew Balance 300 White - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11195687AV , Alberto Venturini Ankle Boot - Women Alberto Venturini Ankle Boots online on YOOX United Kingdom - 11382651JM , Men/Women Calvin Klein Lavida Loafers New designMen/Women Cordani Andalucia Heels reliable qualityOscar de la Renta Glenn 85mmmens/womens Avia Avi-Terrain Sneakers & Athletic Avia Year-end saleman/woman Steve Madden Agathist Sandal Sandals reliable qualityman/woman Coolway Star Sneakers & Athletic Coolway fashionMen/Women Alice + Olivia Eva Sandals Famous storemen/women Lakai Griffin Weather Treated Sneakers & Athletic Lakai Year-end saleJeannot Sandals - Women Jeannot Sandals online on YOOX United Kingdom - 11556850PU , Piampiani Sandals - Women Piampiani Sandals online on YOOX United Kingdom - 11571150JI , Genny Court - Women Genny Courts online on YOOX United Kingdom - 11275974FO , Marsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11543362VI , Bernie Mev. Sneakers - Women Bernie Mev. Sneakers online on YOOX United Kingdom - 11564262XRLADY Dolce&Gabbana Nude Wedges Call first , The color is very eye-catching ECCO Bluma Band , Isabel Marant Burgundy Calf Velvet/ Lamb Leather Sneakerswomens AllSaints Black Alomar Gladiator Sandals International choice , LADY Nude Alora Formal Shoes High security ,
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.