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 - 11471836MJ , Chiarini Bologna Ankle Boot - Women Chiarini Bologna Ankle Boots online on YOOX United Kingdom - 11509331IK , ( Verba ) Loafers - Women ( Verba ) Loafers online on YOOX United Kingdom - 11429724FKFabrizio Chini Ankle Boot - Women Fabrizio Chini Ankle Boots online on YOOX United Kingdom - 11434793HVBikkembergs Ankle Boot - Women Bikkembergs Ankle Boots online on YOOX United Kingdom - 11462644VKSOTOALTO Flexplanta WEDGE-HEEL SANDALS FOR WOMEN , 24HORAS 23392 FASHION LOAFERS FOR WOMEN , womens Unisa Gold Wedges Good qualitySteve Madden Away Heel - Open-Toe Mules - Women Steve Madden Open-Toe Mules online on YOOX United Kingdom - 11492816LR , Women's Pedro Garcia Black Vania Sandals Quality and quantity guaranteedBRUNO PREMI R3000x-bruno Premi FASHION SANDALS FOR WOMENVALVERDE DEL CAMINO 91 FASHION BOOTS FOR WOMENman/woman bernie mev. Harriet Flats Aesthetic appearance , Adidas Ted Baker KAAWA - High heels - blackMen/Women Baretraps Sandrina Boots At a lower price , Men/Women Donald J Pliner Cannes Loafers Modern design , mens/womens Havaianas Slim Flip Flops Sandals Cheap orderAdidas Noclaim ISA - Trainers - neroAnderson Loafers - Men Anderson Loafers online on YOOX United Kingdom - 11382400TF , Diesel Sneakers - Men Diesel Sneakers online on YOOX United Kingdom - 11067710KTMarcelo Burlon Sneakers - Men Marcelo Burlon Sneakers online on YOOX United Kingdom - 11401396JKEtro Sandals - Women Etro Sandals online on YOOX United Kingdom - 11286838QRSuperga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11571415XU , 14th & Union Black Heels Sandals , New in stock Think! Mizzi - 34411LifeStride Peaches A minimalist-inspired ankle boot for sleek wear , ULrJYgeP Women's Prada 3y3173 Sandals superiorGolden Goose Deluxe Brand White Leather Superstar Low-top Sneaker Women's M Euro 41 SneakersJimmy Choo Brown Patina Leather Cork Wedge SandalsTory Burch Black Violet 45mm Heel Suede Sandals
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.