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.Islo Isabella Lorusso Court - Women Islo Isabella Lorusso Courts online on YOOX United Kingdom - 11480740OAHannibal Laguna Ankle Boot - Women Hannibal Laguna Ankle Boots online on YOOX United Kingdom - 11541769EE , Max Bianco Ankle Boot - Women Max Bianco Ankle Boots online on YOOX United Kingdom - 11520254JFMaison Margiela Ankle Boot - Women Maison Margiela Ankle Boots online on YOOX United Kingdom - 11341042QS , Dolce & Gabbana Loafers - Men Dolce & Gabbana Loafers online on YOOX United Kingdom - 11510438LH , I.N.K. Shoes Loafers - Women I.N.K. Shoes Loafers online on YOOX United Kingdom - 11416158LG , Nike Zoom All Out Low 2 - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11504723BA , BOSS Hugo Boss Orlando Low Profile Sneaker by BOSS Green , RIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja5502d20-negro SHOES FOR WOMENDonald J. Pliner Black and Tan Calf Hair SandalsWomen's Christian Louboutin Black Kirara Platforms Low costsCUMBIA 30133 Blanco-oro WEDGE-HEEL SANDALS FOR WOMENNew Look MARLE RUNNER - Trainers , Cole Haan Zerogrand 2 Stripe SandalJfw ross chambray mix trainers , navy/denim, Jack & Jones , man/woman Geox KAULA - Slip-ons cheap , mens/womens Naturalizer Amie Heels At an affordable priceASOS DESIGN | ASOS DESIGN Premium Archer leather cut out ankle boots , Antony Morato Boots - Men Antony Morato Boots online on YOOX United Kingdom - 11486335PA , Arfango Boots - Women Arfango Boots online on YOOX United Kingdom - 11475365MQ , Chocolà Court - Women Chocolà Courts online on YOOX United Kingdom - 11541159DJAlbano Sandals - Women Albano Sandals online on YOOX United Kingdom - 11532790OR , Juicy Couture Loafers - Women Juicy Couture Loafers online on YOOX United Kingdom - 11537459KV , Loriblu Ankle Boot - Women Loriblu Ankle Boots online on YOOX United Kingdom - 11511628FC , Rag & Bone Black Hudson Sandals , Reasonable price Sanita Smart Step Piperwoman Burberry Black/Smoke/Plaid Slides Sandals We have received praise from our customers. , WOMEN Tory Burch Brown Gladiator Wedges Modern technologySalvatore Ferragamo Red Men's Nigel Sneakers Sneakers , women Christian Louboutin Millaclou Sandals Selected materials ,
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.