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.Jeffrey Campbell Sandals - Women Jeffrey Campbell Sandals online on YOOX United Kingdom - 11340729AC , Conni Ankle Boot - Women Conni Ankle Boots online on YOOX United Kingdom - 11517795DA , Vans Navy For J Crew Sneakers , WOMENS Tory Burch Sophie Wedges Modern , 7HsyEDQW men/women Flexus Danila Sandals ExportWood Wood Drew Shoe Unisex Shoes - Sneakers - Men Wood Wood Sneakers online on YOOX United Kingdom - 11458464WS , Loretta By Loretta Ankle Boot - Women Loretta By Loretta Ankle Boots online on YOOX United Kingdom - 11506146QDTwin-Set Simona Barbieri Court - Women Twin-Set Simona Barbieri Courts online on YOOX United Kingdom - 11299712DBAMARPIES Akt9811 Negro WEDGE ANKLE BOOTS FOR WOMEN , WOMEN Dr. Scholl's Silver Zinc Sandals Good market , Donald J. Pliner Beige Microfiber Stretch Sandalsmens/womens Matt Bernson Dash Heels Elegant appearanceFendi Court - Women Fendi Courts online on YOOX United Kingdom - 11489184TJBally Loafers - Men Bally Loafers online on YOOX United Kingdom - 11475166THmens/womens Cole Haan Bancroft Venetian Loafers Make full use of materialsVersace Collection Sneakers - Men Versace Collection Sneakers online on YOOX United Kingdom - 11463639MKmens/womens ECCO Iowa Neo Sneaker Sneakers & Athletic ECCO Modern and elegant fashionDeimille Court - Women Deimille Courts online on YOOX United Kingdom - 11485526FN , Manuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11534878NCJust Cavalli Sneakers - Women Just Cavalli Sneakers online on YOOX United Kingdom - 11251418RQ , Chiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11236631BB , Environmentally friendly Aetrex Cheryl Mary Jane , Laredo Stevie The traditional leather silhouette and striking cutout accents of the Laredo® Stevie boot offers a modern and eye-catching style that will complement any seasonVIONIC Dakota Keep your style up-to-date with the Dakota slide from VIONIC , Bandolino Ginata Modernize your captivating ensemble with the Bandolino Ginata d'Orsay pump , Saint Laurent Multi-color New Yves Ysl Women's Leather Leopard Skate 20 37 SneakersTan Or Beige Peep Toe Silver Scrunch Ridges Fabric Detail SandalsWomen's Fuschia & Pink Formal Shoes New varieties are introduced , Burberry Blue Nova Check Two Ways Sneakers Italy Sneakersladies Blue Manolo Blahnik Carolyne Pumps Modern design
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.