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.Jeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11516752GK20a1eZUq men/women Marchesa Clara Heels comfortabilityBlack Fd8416b.dul0024t055 Scarpa Donna Sma+glo+gla Smack Nero Sneakers , IZAS OUTDOOR Frosty SANDALIAS OUTDOOR PARA HOMBRE , Ladies MIA Tan Malibu Wedges Popular recommendationmens/womens Aerosoles Good Times Flats Complete specificationsmens/womens Spring Step Rolim Boots Brandmen/women Tahari Venus Flats Medium costInov-8 ARCTICTALON 275 - Trail running shoes Colour: blue green/black , Men/Women MJUS Over-the-knee boots Authentic guarantee , men's/women's Tamaris Rice 1-1-28113-26 Heels Year-end special promotionsMen/Women Giuseppe Zanotti E800108 Sandals Orders are welcome , men/women Tommy Hilfiger Anni Sneakers & Athletic Tommy Hilfiger Famous storeClarks BATCOMBE TOP - Classic ankle boots - dark tan , Men/Women Calvin Klein Genevieve Flats High quality and low overhead , Cristiano Bizzarri Boots - Men Cristiano Bizzarri Boots online on YOOX United Kingdom - 11549939GRLost Ink Wide Fit | Lost Ink Wide Fit Red Western Studded Heeled Sandals , 1,618 Sandals - Women 1,618 Sandals online on YOOX United Kingdom - 11384086OTAsh Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11365440FGFitflop Loafers - Women Fitflop Loafers online on YOOX United Kingdom - 11474565KI , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11551986XGEntourage Ankle Boot - Women Entourage Ankle Boots online on YOOX United Kingdom - 11020216GJTom Ford Court - Women Tom Ford Courts online on YOOX United Kingdom - 11238621QUTsd12 Ankle Boot - Women Tsd12 Ankle Boots online on YOOX United Kingdom - 11337858QI , Aquazzura Ankle Boot - Women Aquazzura Ankle Boots online on YOOX United Kingdom - 11481140VN , Børn Black Leather Knot Wedge SandalscQIQV4Ql LADY Fendi White Sandals GermanyIsola Carina Get their attention with your striking style in the Carina sandal from IsoláWOMEN Rampage Silver Formal/Everyday 6m Sandals Highly praised and appreciated by the audience of consumersBirkenstock Tan Manitoba Walking Fashion Sneakers 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.