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.Fabrizio Chini Ankle Boot - Women Fabrizio Chini Ankle Boots online on YOOX United Kingdom - 11428853CE , mens/womens adidas Outdoor Terrex Scope GTX? Sneakers & Athletic adidas Outdoor Make full use of materialsCult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11473860GO , Giuseppe Zanotti Black New Gz Design Vegas Women Velvet & Leather Crystal Chain High-top SneakersJanet & Janet Ankle Boot - Women Janet & Janet Ankle Boots online on YOOX United Kingdom - 44978774SOYmc You Must Create Slippers - Men Ymc You Must Create Slippers online on YOOX United Kingdom - 11493670SUBruno Bordese Ankle Boot - Women Bruno Bordese Ankle Boots online on YOOX United Kingdom - 11491531ELWomen's Manolo Blahnik Silver Sandals Stylish and funnyTory Burch Pink Emmy Demi-wedge Thong Sandals , womens Prada Women's Suede Sandals Fine workmanshipVaude TVL SYKKEL - Cycling shoes Colour: blackBlundstone Classic ankle boots - brown , RIVIERAS COLLEGE OXFORD - Slip-ons Colour: bleue , men/women ALDO Phay Flats Moderate costMen/Women Superfeet Aspen Boots Immediate deliveryD’Acquasparta Sneakers - Men D’Acquasparta Sneakers online on YOOX United Kingdom - 11570744AHT.U.K Sneakers - Men T.U.K Sneakers online on YOOX United Kingdom - 11528306SLErnesto Dolani Boots - Men Ernesto Dolani Boots online on YOOX United Kingdom - 11470955HW , Cafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11380486BEBruschi Sandals - Women Bruschi Sandals online on YOOX United Kingdom - 11464208ROMivida Ankle Boot - Women Mivida Ankle Boots online on YOOX United Kingdom - 11505459NBRoger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 11501683KU , Kudetà Ankle Boot - Women Kudetà Ankle Boots online on YOOX United Kingdom - 11548123UA , Kenzo Ankle Boot - Women Kenzo Ankle Boots online on YOOX United Kingdom - 11475662EUIshikawa Ankle Boot - Women Ishikawa Ankle Boots online on YOOX United Kingdom - 11235192DDBeige Stingray Exotic Man Fisherman Sandalslady Fendi Black Bow Heels Platforms The highest quality materialJ.Crew Seavees(R) For Legend Sneakers In Gingham Sneakers , women Dior Cream Christian Formal Shoes Large selectionWomen's J.Crew Black Coddington Platforms special discount price ,
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.