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.Bailarina By Ska Court - Women Bailarina By Ska Courts online on YOOX United Kingdom - 44515347CJHundred 100 Ankle Boot - Women Hundred 100 Ankle Boots online on YOOX United Kingdom - 11515283JC , Chiara Ferragni Ballet Flats - Women Chiara Ferragni Ballet Flats online on YOOX United Kingdom - 11546733AT , men's/women's SKECHERS Breathe Easy - Relaxation Sneakers & Athletic SKECHERS a good reputation in the world , Strategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11175908BMSalomon Evasion 2 Mid LTR Gtx?Converse All Star Chuck Taylor All Star Lift Ox Canvas Color - Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11510635ES , Twin-Set Simona Barbieri Flip Flops - Women Twin-Set Simona Barbieri Flip Flops online on YOOX United Kingdom - 11205663IA , MISS Blue Wrap Sandals Elegant and robust packaging , WOMENS Tory Burch Brown Sneakers Flagship storeViking HEDDA - Wellies Colour: black , Reebok Classic REVENGE PLUS - Trainersman/woman The FLEXX Sicilian Too Boots Beautiful colormen/women Bella-Vita Adriann II Plus Boots Excellent craft , mens/womens Vivienne Westwood Freddy Ankle Boots Boots Export , Mango FLACHE - Ballet pumps Colour: light blueDiesel Boots - Men Diesel Boots online on YOOX United Kingdom - 11495399MEGivenchy Sneakers - Men Givenchy Sneakers online on YOOX United Kingdom - 11517041EQWomsh Sneakers - Men Womsh Sneakers online on YOOX United Kingdom - 11508796LXMen/Women Superga 2750 Specklew Sneaker Sneakers & Athletic Superga discountRoberto Botticelli Sneakers - Men Roberto Botticelli Sneakers online on YOOX United Kingdom - 11554276CX , Lumberjack Sneakers - Women Lumberjack Sneakers online on YOOX United Kingdom - 11570536CG , Prezioso Court - Women Prezioso Courts online on YOOX United Kingdom - 11219952DNCarmens Ankle Boot - Women Carmens Ankle Boots online on YOOX United Kingdom - 44993930MW , superior Bogs Stockman Composite ToeClergerie Laorap Take a chance! The Laorap from Robert Clergerie will keep you sleek and chic. , Tory Burch Navy Blue Neoprene Slip On Sneaker Flat Loafer New Sneakers , lady Manolo Blahnik Burgundy Sandals We have received praise from our customers.Valentino Neutra Soul Rockstud 65mm City SandalsJimmy Choo Nude Suede 247 Agnes Pumps
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.