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.Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11325387EAJimmy Choo Ankle Boot - Women Jimmy Choo Ankle Boots online on YOOX United Kingdom - 11479155EKAquazzura Blush Pointed Toe Heels SandalsOINRFM1X men/women Joie Nadie Sandals wonderful , Laidback London CRAINE Tan / PastelsLanvin Sizes: 5 6 8 10 SneakersMen/Women Tabitha Simmons Beau Heels low costJoma TOP FLEX TURF - Astro turf trainers Colour: black , men's/women's Hi-Tec St. Moritz 200 WP Boots Wholesale trademens/womens Bed Stu Henna Sandals Elegant and sturdy packaging , Jil Sander Navy High heeled sandals Colour: white/blue , Diemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11418879FX , mens/womens PUMA Tazon 6 Iri Sneakers & Athletic PUMA Fast deliverymen's/women's Hush Puppies Relief Mule Clogs & Mules Low priceEmporio Armani Sneakers - Men Emporio Armani Sneakers online on YOOX United Kingdom - 11511394LGman/woman Altra Footwear Provision 3 Sneakers & Athletic Altra Footwear Full range of specificationsman/woman Nike Metcon 4 Viking Quest Sneakers & Athletic Nike Practical and economical , Ishikawa Sneakers - Women Ishikawa Sneakers online on YOOX United Kingdom - 11523618FCLoriblu Boots - Women Loriblu Boots online on YOOX United Kingdom - 11090441GW , Alberta Ferretti Boots - Women Alberta Ferretti Boots online on YOOX United Kingdom - 11460790DU , Giancarlo Paoli Court - Women Giancarlo Paoli Courts online on YOOX United Kingdom - 11279478KCPrada Sport Sneakers - Women Prada Sport Sneakers online on YOOX United Kingdom - 11543502IN , Pepe Jeans Sneakers - Women Pepe Jeans Sneakers online on YOOX United Kingdom - 11578170PV , Charlotte Olympia Loafers - Women Charlotte Olympia Loafers online on YOOX United Kingdom - 11532241XI , Rick Owens Sneakers - Men Rick Owens Sneakers online on YOOX United Kingdom - 11494696MA , Stylish and charming Salomon X Alp Spry , MIA Marilou Give your look a sport-chic detail with the MIA Marilou booties , Loeffler Randall Blue Scalloped Open Toe with Ankle Strap SandalsWomen's BCBGeneration Ballerina Wedges At a lower price , G.H. Bass & Co. Brown Oxford Sneakers
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.