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.Antica Calzoleria Campana Loafers - Men Antica Calzoleria Campana Loafers online on YOOX United Kingdom - 11453642QVMax Bianco Court - Women Max Bianco Courts online on YOOX United Kingdom - 11493821VTJust Cavalli Sneakers - Women Just Cavalli Sneakers online on YOOX United Kingdom - 11341089JJWomen's Lanvin Espadrille Wedges Superior quality , NTiKtX5A mens/womens PATRIZIA Heldia Boots feature , PUMA x ATELIER NEW REGIME Court Platform Brace Sneakers | Puma Black-Scarlet Ibis | PUMA SHOP ALL | PUMA United StatesMega NRGY Heather Knit Men’s Running Shoes | Strong Blue-Puma White , Claudia By Isaberi Ankle Boot - Women Claudia By Isaberi Ankle Boots online on YOOX United Kingdom - 11568855NK , CUMBIA 30964 Verde Nuez WEDGE-HEEL SANDALS FOR WOMEN , EXE Broadway-284 WEDGE ANKLE BOOTS FOR WOMENmens/womens Frances Valentine Iris Sandals Elegant stylemens/womens Isola Yara Heels Fine processing , men/women H?gl Wedge boots Colour: black best sellerE8 BY MIISTA SELMA - Ankle boots Colour: blackmen/women Chinese Laundry Rainey Boot Boots Wear resistantVagabond | Vagabond Grace Black Leather Ankle Boots , P448 Sneakers - Men P448 Sneakers online on YOOX United Kingdom - 11353234VS , Pollini Sneakers - Men Pollini Sneakers online on YOOX United Kingdom - 11569982TINike Sportswear SF AF1 - High-top trainers - blue tint/blue tint-blue tintJfk Sandals - Women Jfk Sandals online on YOOX United Kingdom - 11350161US , Primabase Sneakers - Women Primabase Sneakers online on YOOX United Kingdom - 11474920PBBarachini Sandals - Women Barachini Sandals online on YOOX United Kingdom - 11548653DE , Luciano Barachini Loafers - Women Luciano Barachini Loafers online on YOOX United Kingdom - 11555624BHMigliore Ankle Boot - Women Migliore Ankle Boots online on YOOX United Kingdom - 11276153TX , White Millan Sneakers - Men White Millan Sneakers online on YOOX United Kingdom - 11575068VQ , Dior Black J'adior 85 Slingback PumpsHaflinger Charisma Add subtle beauty with a whole lot of comfort to your nighttime ensemble with the Charisma slipper from Haflinger , Nike Women's Free 4.0 Flyknit Running Style/Color: 717076-503 Sneakers , women Brunello Cucinelli Black-dark Brown Sandals Online shopladies Givenchy Blac Rubber Slide Sandals durable ,
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.