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.Moon Boot Ankle Boot - Women Moon Boot Ankle Boots online on YOOX United Kingdom - 44700844TL , Shop ★ Art Sneakers - Women Shop ★ Art Sneakers online on YOOX United Kingdom - 11275103XQCafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11478488SA , Gaudì Ankle Boot - Women Gaudì Ankle Boots online on YOOX United Kingdom - 11455296RRSOTOALTO Tirahebi SANDALIA BIO PARA MUJER , GIOSEPPO 41256-30980 BOTíN PLANO DE MUJER , Janet & Janet Ankle Boot - Women Janet & Janet Ankle Boots online on YOOX United Kingdom - 11246668QLLADY Helmut Lang Black Formal Shoes Known for its excellent qualityMTNG 94376 C23077 Ceniza BOTíN PLANO DE MUJERMISS Fendi Green Hightop Sneakers Sneakers Low priceKenneth Cole Unlisted Half n Half , Adidas Kanna BASIC - Platform sandals - paloma tabacco , Tassel detail mules , navy blue, La Redoute CollectionsConverse | Converse Chuck Taylor All Star leather platform low sneakers in black , mens/womens ECCO Shape 75 Chelsea Boot Boots a wide range of productsmens/womens Kenneth Cole New York Oda Heels Stylish and fun , man/woman Diadora N9000 NYL II Sneakers & Athletic Diadora Make full use of materials , Nike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11530998PD , Ash Sandals - Women Ash Sandals online on YOOX United Kingdom - 11391282RXMorobē Sneakers - Women Morobē Sneakers online on YOOX United Kingdom - 11584877WWDorateymur Ankle Boot - Women Dorateymur Ankle Boots online on YOOX United Kingdom - 11453936KM , Armani Jeans Sneakers - Women Armani Jeans Sneakers online on YOOX United Kingdom - 11544329PJN° 21 Sandals - Women N° 21 Sandals online on YOOX United Kingdom - 11446341WI , Sergio Rossi Sandals - Women Sergio Rossi Sandals online on YOOX United Kingdom - 11353146KCPrada Ankle Boot - Women Prada Ankle Boots online on YOOX United Kingdom - 44810260UADiverse new design OluKai Nalukai Kapa Boot , Clergerie Laorap Take a chance! The Laorap from Robert Clergerie will keep you sleek and chic. , LADY Saint Laurent Nude Tribute Wedges High quality and cheap , WOMEN Tory Burch Black Adonis Wedges High-quality materials , lady Saint Laurent Brown New Sandals High-quality ,
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.