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.RALPH LAUREN Latasha SHOES FOR WOMENWomen's No Boundaries Wedges Good qualityConverse All Star Ct As Hi Canvas Print - Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11216048LP , Prada White Patent Leather Twisted Thong Sandals , man/woman Sofft Misty Heels King of quantity , Adidas Esprit AIDA - Ankle boots - dark grey , New Look FINSTER MID TRAINER - High-top trainers , mens/womens Zign Ankle boots Colour: black Excellent craft , E8 BY MIISTA JULIA - High heels Colour: black , WAY OUT LONDON Over-the-knee boots Colour: rock neroCappelletti Boots - Men Cappelletti Boots online on YOOX United Kingdom - 11389872RI , Hogan Loafers - Men Hogan Loafers online on YOOX United Kingdom - 11297445ABMassimo Dutti MIT ELASTISCHEM SCHAFT - Classic ankle boots - brownNew Look Wide Fit WIDE FIT OGHILLIE - Sandals Colour: brown , Men/Women Diadora Cinquinha TF Sneakers & Athletic Diadora Many stylesSergio Rossi Boots - Men Sergio Rossi Boots online on YOOX United Kingdom - 11547278JTArfango Loafers - Women Arfango Loafers online on YOOX United Kingdom - 11581643MWValleverde Sandals - Women Valleverde Sandals online on YOOX United Kingdom - 11553003IID.A.T.E. Sneakers - Women D.A.T.E. Sneakers online on YOOX United Kingdom - 11476316XW , Puma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11559413NICorvari Ankle Boot - Women Corvari Ankle Boots online on YOOX United Kingdom - 11546852RS , F.Lli Bruglia Court - Women F.Lli Bruglia Courts online on YOOX United Kingdom - 11408584BD , Various latest designs Vasque Breeze III GTX , Stylish and fun adidas Freak x Carbon , Laredo Sharona Just remember that these are your Sharona bootsOnex Tatiana It is recommended that you order 1/2 to 1 full size larger than your usual size. , Bandolino Cobalt Blue Patent Leather with Cork Wedge Heel New Shoes/Designer SandalsLe Coq Sportif White W/ Gray Vintage Style Sneakerswomens Taryn Rose Black Wedges New varieties are introducedwoman bebe Black Suede Wedges The newest style
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.