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.Get It Ankle Boot - Women Get It Ankle Boots online on YOOX United Kingdom - 11513017ESSimone Rocha Court - Women Simone Rocha Courts online on YOOX United Kingdom - 11455466WLSara López Sneakers - Women Sara López Sneakers online on YOOX United Kingdom - 11533693EL , PEDRO MIRALLES 18529-pedro Miralles FASHION SANDALS FOR WOMENmens/womens Joie Lahoma Heels professional design , mens/womens Seychelles Matinee Boots Elegant shapeDorothy Perkins Wide Fit WIDE FIT STAR - Sandals , Chi Chi London JENNA - High heels Colour: navymen/women Buffalo High heels good quality , Men/Women Kork-Ease Amber Heels Elegant and stable packagingWl373esp leather trainers , blue grey, New Balance , Adidas ohw? FLEUR - Trainers - bordeaux , Baldinini Loafers - Men Baldinini Loafers online on YOOX United Kingdom - 11554960MB , Versace Collection Boots - Men Versace Collection Boots online on YOOX United Kingdom - 11509148XL , Giuseppe Zanotti Boots - Men Giuseppe Zanotti Boots online on YOOX United Kingdom - 11547948SDGianfranco Lattanzi Sneakers - Men Gianfranco Lattanzi Sneakers online on YOOX United Kingdom - 11513242JTDirk Bikkembergs Sneakers - Men Dirk Bikkembergs Sneakers online on YOOX United Kingdom - 11220166TGDiadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11228200JGFormentini Sandals - Women Formentini Sandals online on YOOX United Kingdom - 11375935QPAlberto Fermani Boots - Women Alberto Fermani Boots online on YOOX United Kingdom - 11560507HN , Replay Ankle Boot - Women Replay Ankle Boots online on YOOX United Kingdom - 11493428PGLemaré Open-Toe Mules - Women Lemaré Open-Toe Mules online on YOOX United Kingdom - 11139048OV , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11393124LD , See by Chloé Black Gold-strap SandalssHAxt4YI woman Bluegreen Wedges Large selectionNaturalizer Tinda The Naturalizer Tinda keeps you looking sharp, sophisticated, and on-trend , Kenneth Cole Gray Suede Knot Detail Slip On Sneakers SneakersMISS Giuseppe Zanotti High-top Sneakers Sneakers Stylish and funny , woman Jimmy Choo Nude Prima Wedges Strong valueFrye Black Brielle Gladiator Dress 242 Sandals
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.