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.Diadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11117538OMNike SFB Field 2 8'' Realtree , ADIDAS Bb7185 HIGH-TOP TRAINERS FOR MENPlatform Slide Digital Embroidery Women's Sandals | Puma Black-Silver-W.OrchidReebok Instapump Fury Og Ul - Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11451559CVLauren Ralph Lauren Green with Tan Cork Suede Sandals , WOMEN Prada Blue Men 2de0838 Sneakers special purchase , womens Jimmy Choo Pink Raffia Sandals Online shop , men's/women's Geox WAMINTAABX1 Boots Diverse new designMen/Women Tory Burch Brae Slide Sandals buymen's/women's Gabor Gabor 81.720 Heels unique , men/women Charles by Charles David Farren Boots Excellent workmanship , Men/Women Kenneth Cole Reaction Pool Game Sandals Excellent stretching , Campus stitch and t trainers , black, Adidas Originals , Lloyd ELKAN - T-bar sandals - schwarzA.Testoni Loafers - Men A.Testoni Loafers online on YOOX United Kingdom - 11408514EIVersace Sneakers - Men Versace Sneakers online on YOOX United Kingdom - 11530589NJArmani Jeans Loafers - Men Armani Jeans Loafers online on YOOX United Kingdom - 11204297NP , Sergio Rossi Sneakers - Men Sergio Rossi Sneakers online on YOOX United Kingdom - 11285098IXStokton Sneakers - Women Stokton Sneakers online on YOOX United Kingdom - 11530806WSCouture Loafers - Women Couture Loafers online on YOOX United Kingdom - 11486455KU , Puma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11505579TG , Álvaro González Sandals - Women Álvaro González Sandals online on YOOX United Kingdom - 11235234NR , Strategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11570579TX , Dansko Light Tan Cutout Wedge Sandals , lMF58tTy Superga 2288 Vcotw Sneaker Mule , Speed refund DC Travis Rice '18Buscemi Pink and White with Gold Buckle 100mm Sneakers , Air Jordan Multi Color Retro 11 Space Jam Sneakers , Women's Copper/Bronze Copper/Bronze Strapy Platform Sandals Aesthetic appearance ,
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.