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.Alberta Ferretti Open-Toe Mules - Women Alberta Ferretti Open-Toe Mules online on YOOX United Kingdom - 11328611IJ , Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11275941BPL' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11071561LCTipe E Tacchi Sandals - Women Tipe E Tacchi Sandals online on YOOX United Kingdom - 11332488NJ , Momento Ankle Boot - Women Momento Ankle Boots online on YOOX United Kingdom - 11264819KAViapantaleoni® Ankle Boot - Women Viapantaleoni® Ankle Boots online on YOOX United Kingdom - 11480184LX , Rodolphe Menudier Court - Women Rodolphe Menudier Courts online on YOOX United Kingdom - 11091090DLWOMEN Christian Louboutin Espadrille Wedges Easy , MISS Fendi Green Hightop Sneakers Sneakers Low priceGO SEXY S048830001mse LOW-TOP TRAINERS FOR WOMEN , mens/womens Steve Madden Nevadaaa Boots Maintenance capabilityNew Look KARITA - Slip-ons Colour: black , Bianco CHUNKY STREET - TrainersDorothy Perkins STELLA - SandalsPeter Kaiser QUILL - Classic ankle boots Colour: schwarz siaFilippa K LARA MULE - Heeled mules Colour: black , Teva CLASSIC PREMIUM - T-bar sandals Colour: dark earth , Men/Women Frye Graham Stitch Tall Boots Sufficient supply , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 44748436DEHecon Boots - Men Hecon Boots online on YOOX United Kingdom - 11450331HK , Rick Owens Boots - Men Rick Owens Boots online on YOOX United Kingdom - 11452497MH , Mi/Mai Court - Women Mi/Mai Courts online on YOOX United Kingdom - 11506012BJScardavi Sandals - Women Scardavi Sandals online on YOOX United Kingdom - 11525154QWRoger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 11500985JEMaria Cristina Boots - Women Maria Cristina Boots online on YOOX United Kingdom - 11519609LH , Giordana F. Loafers - Women Giordana F. Loafers online on YOOX United Kingdom - 11546300IX , Bibi Lou Sandals - Women Bibi Lou Sandals online on YOOX United Kingdom - 11346367BL , g9RBp1GJ HISPANITAS Pcv87163 SHOES FOR WOMEN , women Giuseppe Zanotti Nude Cassie Sandals High quality and cheap , WOMENS Robert Clergerie Silver Heels Wedges luxury ,
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.