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.U.S.Polo Assn. Ankle Boot - Women U.S.Polo Assn. Ankle Boots online on YOOX United Kingdom - 11516272BA , Elisabetta Franchi Ankle Boot - Women Elisabetta Franchi Ankle Boots online on YOOX United Kingdom - 11244418QX , Converse All Star Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11559482RCLaurence Dacade Ankle Boot - Women Laurence Dacade Ankle Boots online on YOOX United Kingdom - 11214462GBDolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11508183JP , Adidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11263977DAVince Camuto Sandals - Women Vince Camuto Sandals online on YOOX United Kingdom - 11405071XB , Anthropologie Coral Tretorn Velvet Sneakers SneakersNike Air Zoom Pegasus 34 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11288969EO , adidas Mint Green and Navy Blue Kylie Falcons Sneakers , Ladies Prada Brown Suede Prada328 Wedges Reliable performance , Ladies Nina Rose Golden Sandals Complete specification area , Men/Women Bella-Vita Zelda Boots Explosive good goods , Heart patent trainers , white patent, Puma , Converse CHUCK TAYLOR ALL STAR - High-top trainers Colour: black/silver , Adidas Reebok Classic CL LTHR RIPPLE SM - Trainers - sand stone/chalk , man/woman New Balance Classics ML373 Sneakers & Athletic New Balance Classics cheap , men's/women's Melissa Shoes Be Flocked Sneakers & Athletic Melissa Shoes discount , men's/women's Emerica The Reynolds Low Sneakers & Athletic Emerica Amoy , men's/women's PUMA Future 18.4 TT Sneakers & Athletic PUMA cheapestAntony Morato Boots - Men Antony Morato Boots online on YOOX United Kingdom - 11506213HAJohn Galliano Loafers - Men John Galliano Loafers online on YOOX United Kingdom - 11357089EASteve Madden Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11373944BJ , Botticelli Limited Sneakers - Women Botticelli Limited Sneakers online on YOOX United Kingdom - 11406079OR , Serafini Luxury Sneakers - Women Serafini Luxury Sneakers online on YOOX United Kingdom - 11426342PU , Roger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 11501068EH , Preferred material Pikolinos Sitges W7J-4665CLJimmy Choo Black Men's Barlowe Viper Print Sneaker Sneakers , WOMENS Stone Sirus 044050732 Wedges Win highly appreciated , WOMEN Fendi Blue Leather Platform Sandals Reasonable 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.