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.Loretta Pettinari Ankle Boot - Women Loretta Pettinari Ankle Boots online on YOOX United Kingdom - 11494332EWmen's/women's Marc Fisher Garden 2 Clogs & Mules Highly praised and appreciated by the consumer audienceDADá S021855555bvv FASHION BALLERINAS FOR WOMENWOMEN Nike Ace Sneakers retail priceOfficine Creative Italia Ankle Boot - Women Officine Creative Italia Ankle Boots online on YOOX United Kingdom - 11517226WM , Nike W Cortez Ultra Br - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11060685FJ , NATALIA BLANCO Botin Natalia Blanco De Piel Marron 77191t BOTíN PLANO DE MUJER , ZIGI soho Multicolor Nwob Mariane Embellished In Pink Fabric SandalsWOMENS Christian Louboutin Black Disqueen Platforms Cheap order , men/women Gabor Gabor 55.750 Boots Modern technologyFila | Fila Disruptor Sneaker In Black , men's/women's 1.STATE Kenton Heels Modern mode , Mrl420ss trainers , burgundy, New Balance , Dorothy Perkins ELLA - Classic heels Colour: black , Burberry Sneakers - Men Burberry Sneakers online on YOOX United Kingdom - 11570886XImen/women David Tate Santo Flats Every item described is availablePuma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11559266IOGrisport Ankle Boot - Women Grisport Ankle Boots online on YOOX United Kingdom - 11465048JS , Proenza Schouler Sandals - Women Proenza Schouler Sandals online on YOOX United Kingdom - 11488612SXPaul Andrew Sandals - Women Paul Andrew Sandals online on YOOX United Kingdom - 11552772SCChiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11358558CENike Womens Presto Fy New Sneakers , Acknowledgement feedback Kenneth Cole Unlisted Stun-Ner , Brand adidas Golf Adicross BounceSAS Milano Fit should provide room across the ball-of-foot and wiggle room for the toes. , WOMENS Jimmy Choo Pink Sparkle Sandals High quality and cheapGiuseppe Zanotti Shell (Blush) Lorenz Zip Front Wedge SneakersSalvatore Ferragamo Tan & Brown Canvas Slingbacks Sandalsladies Isabel Marant Black Platform 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.