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.Leather Crown Ankle Boot - Women Leather Crown Ankle Boots online on YOOX United Kingdom - 11317605BMBRUNATE 69517 WEDGE-HEEL SANDALS FOR WOMEN , Ovye' By Cristina Lucchi Ballet Flats - Women Ovye' By Cristina Lucchi Ballet Flats online on YOOX United Kingdom - 11563749GU , Liu ?Jo Shoes Sandals - Women Liu ?Jo Shoes Sandals online on YOOX United Kingdom - 11217420QK , MARIA MARE 66105 Brush Negro FASHION SANDALS FOR WOMEN , women Coloriffics Silver 830 Formal Shoes Different productsSKECHERS Performance Go Walk 4 - Achievermens/womens Calvin Klein Suchi Heels Cost-effectiveL’Autre Chose High heeled sandalsBOSS CASUAL RUMBA TENN - Trainers - blackmen's/women's Jack Rogers Starstruck Flats Suitable for color , Buscemi Sneakers - Men Buscemi Sneakers online on YOOX United Kingdom - 11471150WB , Prada Loafers - Men Prada Loafers online on YOOX United Kingdom - 11510794WL , mens/womens SKECHERS G0run 600 - Divert Sneakers & Athletic SKECHERS Consumer first , mens/womens Tretorn Nylite HI7 Sneakers & Athletic Tretorn Exquisite (middle) workmanship , men/women Circus by Sam Edelman Scotlyn Sneakers & Athletic Circus by Sam Edelman wonderfulman/woman Allrounder by Mephisto Niro Sneakers & Athletic Allrounder by Mephisto Various latest designs , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11416727GH , P448 Sneakers - Women P448 Sneakers online on YOOX United Kingdom - 11339401HR , Ash Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11557845JBEllemme Court - Women Ellemme Courts online on YOOX United Kingdom - 11082826WBChloé Boots - Women Chloé Boots online on YOOX United Kingdom - 11462054VPHtc Ankle Boot - Women Htc Ankle Boots online on YOOX United Kingdom - 11095648FWGiuseppe Zanotti Boots - Women Giuseppe Zanotti Boots online on YOOX United Kingdom - 11039782CMCafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 44880848FL , Kork-Ease Niseda Put a fresh spin on your classic look with the Niseda oxford by Kork-Ease , Giuseppe Zanotti Gold / Black Sneakers - - 37 - Brown Metal Strap Zipper Sneakers , Giuseppe Zanotti Black * Patent Leather Gold Buckle SandalsChristian Louboutin Black / Grey Manovra 70 Slingback Pumps , Dior Orange New 2016 Embellished Fushion 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.