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.The Seller Ankle Boot - Women The Seller Ankle Boots online on YOOX United Kingdom - 11511254DRPaolo Sartori Rose Sneakers - Women Paolo Sartori Rose Sneakers online on YOOX United Kingdom - 11546106UW , Reebok Club Workout - Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11272241QPConverse Limited Edition As Ox Platform Canvas/Leather - Sneakers - Women Converse Limited Edition Sneakers online on YOOX United Kingdom - 11394480CRVans Ua Authentic Port Royale/Bla - Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11560013PE , JAIME MASCARO 47580-jaime Mascaro FASHION LOAFERS FOR WOMEN , CLARKS Tri Abby ZAPATO PLANO PARA MUJER , mens/womens Shellys London Tater Boots Beautiful appearance , Esprit SALLY - High heeled sandalsSKECHERS Classic Fit Superior 2.0 - OlenLes Tropéziennes par M Belarbi HANANO - Sandals Colour: tanShoe The Bear DYLAN - Slip-ons - greenMen/Women Volcom Slacker 2 Slipper Slippers Recommended today , Men/Women Crocs Capri V Sequin Sandals Great variety , Dune London EUPHORIAA - High-top trainers Colour: blackDior Sneakers - Women Dior Sneakers online on YOOX United Kingdom - 11451872JNMiss Selfridge CYLINDER CHELSEA BOOT - High heeled ankle boots Colour: blackman/woman Copenhagen Platform boots Colour: black Clever and practical , Diadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11357036GK , New Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11570387KB , Rodo Court - Women Rodo Courts online on YOOX United Kingdom - 11571790SIMsgm Sneakers - Women Msgm Sneakers online on YOOX United Kingdom - 11366115CQFabi Sandals - Women Fabi Sandals online on YOOX United Kingdom - 11415840TC?ù Sneakers - Women ?ù Sneakers online on YOOX United Kingdom - 11275619RWLocker 41 Sneakers - Women Locker 41 Sneakers online on YOOX United Kingdom - 11527672DOCharlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11544268SU , 9BWTt8cD MISS Fendi Sandals Primary quality , New products in 2022 Florsheim Lakeside OxLADY Christian Louboutin Velvet Sneaker Sneakers The newest style , Jimmy Choo Green Men's High Top Sneakers Sneakers ,
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.