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.O.X.S. Rubber Soul Sneakers - Women O.X.S. Rubber Soul Sneakers online on YOOX United Kingdom - 11457620WK , George J. Love Sneakers - Women George J. Love Sneakers online on YOOX United Kingdom - 11559765BEStJKrDWy men/women Onex Lilibeth Heels Brand , EeM1boP4 mens/womens Vaneli Favor Flats feature , Alma En Pena. Ankle Boot - Women Alma En Pena. Ankle Boots online on YOOX United Kingdom - 11243758GOMISS Miss Albright Bone Laurie Sandals Quality firstMARPEN Tauber Marron FASHION SLIPPERS FOR WOMENDune London HARPS - Ballet pumps Colour: brown , Men/Women Sesto Meucci Gabbey Sandals Preferential price , MM6 Maison Margiela Neon Pop Low TrainerMen/Women Vaneli Solana Flats Wear resistantmens/womens Bandolino Xanti Heels Reasonable priceSKECHERS Performance On-The-Go 600 - Regal , man/woman Bullboxer Cowboy/Biker boots have funMen/Women Dingo Lou Lou Boots Tide shoes list , Pollini Loafers - Men Pollini Loafers online on YOOX United Kingdom - 11447441EJ , mens/womens Frye Lena Zip High Sneakers & Athletic Frye cheapLacoste Sneakers - Women Lacoste Sneakers online on YOOX United Kingdom - 11568358VPTod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11435742CI , Cult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11506808XACole Haan Tan/Brown Elsie Thong Sandals , Y1tzoYKV Nine West Daday Dress Wedge , Order welcome Johnston & Murphy EdenGood world reputation Chinese Laundry Fia PumpThe highest quality material Katy Perry The MemphisNike Multi-color Women's Roshe One Premium Plus Casual Camouflage Prints New In Box Sneakers , WOMENS Christian Louboutin Christeriva Heels Pumps The color is very noticeablelady Joshua Sanders White Pellame Sneakers Moderate costswomen Vince Camuto Black Jerimya Sandals Crazy priceCommon Projects White Women's Tournament Low 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.