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.Emanuela Passeri Ankle Boot - Women Emanuela Passeri Ankle Boots online on YOOX United Kingdom - 11444576TIMaestri Capresi Flip Flops - Men Maestri Capresi Flip Flops online on YOOX United Kingdom - 11328129IH , Galliano Ballet Flats - Women Galliano Ballet Flats online on YOOX United Kingdom - 11260994NVLorenzo Mari Loafers - Women Lorenzo Mari Loafers online on YOOX United Kingdom - 11497173HITosca Blu Shoes Ankle Boot - Women Tosca Blu Shoes Ankle Boots online on YOOX United Kingdom - 11239241CSReebok Coal/Ash Grey/Black Guresu 1.0 Women Training Sneakers , womens FreeBird Ice Distressed Claw Sandals Charming design , WOMENS Nike 00000 Sneakers Various current designsVero Moda VMALMA - TrainersKARL LAGERFELD KAMPUS MID CUT - High-top trainers Colour: black , men/women Bugatti Trainers List of explosions , Men/Women Kork-Ease Amber Heels Elegant and stable packaging , Lumberjack Sneakers - Men Lumberjack Sneakers online on YOOX United Kingdom - 11561003QIAttimonelli's Loafers - Men Attimonelli's Loafers online on YOOX United Kingdom - 11448014PN , Geox Boots - Men Geox Boots online on YOOX United Kingdom - 11315450QPVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11492428OI , men/women Lugz Vet CC Sneakers & Athletic Lugz High securityCasablanca 1942 Loafers - Men Casablanca 1942 Loafers online on YOOX United Kingdom - 11519431NDTriver Flight Boots - Men Triver Flight Boots online on YOOX United Kingdom - 11557227FLSperry Top-Sider Sneakers - Men Sperry Top-Sider Sneakers online on YOOX United Kingdom - 44980716FC , Belstaff Sneakers - Women Belstaff Sneakers online on YOOX United Kingdom - 11536788FB , F.Lli Bruglia Court - Women F.Lli Bruglia Courts online on YOOX United Kingdom - 11520323LL , Love Moschino Court - Women Love Moschino Courts online on YOOX United Kingdom - 11451118PAAlexander Wang Court - Women Alexander Wang Courts online on YOOX United Kingdom - 11496447CK , SrKlRCmU SKECHERS 76536ec SLIP-ON PARA MUJERxrQjmMVh Women's Nicholas Kirkwood Platforms NiceBreathable shoes inov-8 Roclite 315 , Brighton Galore You will receive compliments galore in these fierce booties from Brighton , Born Tavar Comfort meets a rustic-chic design with the Brn Tavar bootie , mJh95ntO WOMEN Fendi Navy Sandals auction ,
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.