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.Verdecchia & Maniqua' Boots - Women Verdecchia & Maniqua' Boots online on YOOX United Kingdom - 11536455FNHISPANITAS Hv86779 LOW-TOP TRAINERS FOR WOMEN , SKECHERS 801_sil LOW-TOP TRAINERS FOR WOMENLOLAS S046903275mch FASHION LOAFERS FOR WOMENMINT 30331 FASHION FOOTWEAR FOR WOMENMERCEDES AMG PETRONAS Motorsport Drift Cat 7 Sneakers | Puma White-Puma White | PUMA Mercedes AMG Petronas | PUMA United StatesVivienne Westwood Anglomania + Melissa Ankle Boot - Women Vivienne Westwood Anglomania + Melissa Ankle Boots online on YOOX United Kingdom - 11409259SBSaint-Honoré Paris Souliers Ballet Flats - Women Saint-Honoré Paris Souliers Ballet Flats online on YOOX United Kingdom - 11168557DC , THIERRY RABOTIN 800 B ZAPATO DE CU?A PARA MUJERGADEA 40935 ZAPATO DE SALóN PARA MUJER , Men/Women Blowfish Deel Sandals leading the fashion , men/women Vagabond CAMILLE - Slip-ons Strong value , man/woman MUK LUKS Heidi Sandals Elegant and stable packaging , mens/womens Rieker R3358 Elaine 58 Boots the most economical , men's/women's See by Chloe SB29162 Boots Elegant shape , Fabi Boots - Men Fabi Boots online on YOOX United Kingdom - 11537719EQMen/Women Alexander McQueen Tapestry Patchwork Slipper Flats Adequate supply and timely delivery , New Balance FRESH FOAM GOBI V2 - Trail running shoes Colour: greymen's/women's Nevados Klondike Low WP Sneakers & Athletic Nevados Outstanding features , Filling Pieces Sneakers - Men Filling Pieces Sneakers online on YOOX United Kingdom - 11548858TWDiesel Court - Women Diesel Courts online on YOOX United Kingdom - 11308845CN , Geox Sandals - Women Geox Sandals online on YOOX United Kingdom - 11002911OV , Emanuela Passeri Court - Women Emanuela Passeri Courts online on YOOX United Kingdom - 11569252GFDonna Soft Court - Women Donna Soft Courts online on YOOX United Kingdom - 11392252SEProenza Schouler Loafers - Women Proenza Schouler Loafers online on YOOX United Kingdom - 11542509DHThe Editor Sneakers - Men The Editor Sneakers online on YOOX United Kingdom - 11183727IP , Marc Edelson Loafers - Men Marc Edelson Loafers online on YOOX United Kingdom - 11578427KH , z1uNJ41n Reebok Lifestyle Workout Lo FVSSXs2nHhF Louis Garneau Ruby II Shoeswoman Donald J. Pliner Fifi Sandals Consumers first
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.