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.George J. Love Sandals - Women George J. Love Sandals online on YOOX United Kingdom - 11469934JF , Steve Madden Ankle Boot - Women Steve Madden Ankle Boots online on YOOX United Kingdom - 11482502GAIsabel Marant Étoile Sandals - Women Isabel Marant Étoile Sandals online on YOOX United Kingdom - 11304110HX , LOLAS S041076909bki FASHION LOAFERS FOR WOMENEllen Tracy Black Comfortable Wedgies Sandals , Carson 2 X Knit Women’s Running Shoes | Quarry-Puma White | PUMA Private Sale | PUMA United StatesAgile By Rucoline Ankle Boot - Women Agile By Rucoline Ankle Boots online on YOOX United Kingdom - 11064146BI , Women's Pierre Hardy Black Wedges Ideal gift for all occasions , Puma Blue Turqouise Old School Suede Atoll Sneaker SneakersVince Black Bowen Skater Slip-on In Suede Sneakers , MISS Tory Burch Nude Sandals Easy to handle , Kaishi 2.0 trainers , blue/yellow, NikeSKECHERS Work D'Lite SR - AmasaMen/Women Pelle Moda Rea Heels High quality and cheapIshikawa Sneakers - Men Ishikawa Sneakers online on YOOX United Kingdom - 11519976ON , Men/Women Cole Haan Zerogrand Stitchlite Ballet Sneakers & Athletic Cole Haan comfortability , Adidas mtng CALI - High heeled boots - antil taupeSalvatore Ferragamo Loafers - Men Salvatore Ferragamo Loafers online on YOOX United Kingdom - 11455784MDPennyblack Court - Women Pennyblack Courts online on YOOX United Kingdom - 11489567ED , Starlet Court - Women Starlet Courts online on YOOX United Kingdom - 11494348WCF.Lli Bruglia Loafers - Women F.Lli Bruglia Loafers online on YOOX United Kingdom - 11520246NMKeb Ankle Boot - Women Keb Ankle Boots online on YOOX United Kingdom - 11517450NO , Prada Ankle Boot - Women Prada Ankle Boots online on YOOX United Kingdom - 11519182HTEnvironmentally friendly FLY LONDON WHIN176FLY , Elegant style Stacy Adams Balen , Ryka Marilyn Have some fun with your look while keeping it comfy in the Ryka Marilyn sandals!women Christian Louboutin Glenalta Platforms Known for its beautiful quality , Women's Tory Burch Black Grove Wedges New designWOMEN Brooks Brothers Navy Equestrian Sandals Preferred material , Alexander McQueen Black and White 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.