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.Anna Baiguera Ballet Flats - Women Anna Baiguera Ballet Flats online on YOOX United Kingdom - 44922217NM , Acne Studios Ankle Boot - Women Acne Studios Ankle Boots online on YOOX United Kingdom - 11559758ORCesare Paciotti 4Us Sneakers - Men Cesare Paciotti 4Us Sneakers online on YOOX United Kingdom - 11206606QWSaucony Jazz O "Camo" - Sneakers - Men Saucony Sneakers online on YOOX United Kingdom - 11545201PUAerin Ballet Flats - Women Aerin Ballet Flats online on YOOX United Kingdom - 11467631CRJack Rogers Neutral Exclusive Parrot SandalsIrregular Choice PEACH MELBA Marine , ladies Adrienne Vittadini Chari Wedges Strong heat and wear resistance , men/women Cordani Serra Boots Practical and economicalRockport Total Motion 20mm Lazer Cutout Ballet , Men/Women Dr. Scholl's Really Flats Don't worry when shopping , mens/womens Church's Toulston Suede Oxford Oxfords Global salesSantoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11478719XXHagl?fs BJ?RBO PROOF ECO MEN - Walking boots - driftwoodThe Willa Sneakers - Men The Willa Sneakers online on YOOX United Kingdom - 11516660QX , mens/womens Rieker 66514 Rabea 101 Heels The first batch of customers' comprehensive specificationsTsd12 Sneakers - Women Tsd12 Sneakers online on YOOX United Kingdom - 11453824KA , Panella Sandals - Women Panella Sandals online on YOOX United Kingdom - 11474314BA , Rupert Sanderson Sandals - Women Rupert Sanderson Sandals online on YOOX United Kingdom - 11576747IN , Alberto Guardiani Sandals - Women Alberto Guardiani Sandals online on YOOX United Kingdom - 11561542CHPrada Sport Sneakers - Women Prada Sport Sneakers online on YOOX United Kingdom - 11047606RSEssentiel Antwerp Sandals - Women Essentiel Antwerp Sandals online on YOOX United Kingdom - 11359925BW , Roberto Festa Sandals - Women Roberto Festa Sandals online on YOOX United Kingdom - 11418029BLLuciano Padovan Court - Women Luciano Padovan Courts online on YOOX United Kingdom - 11219799JRWOMENS Seychelles Blac Wedges Year-end salesKamik Playa Fun will definitely be had when you're wearing the super stylish and comfy Kamik Playa sandalsWOMEN Stuart Weitzman Sohojute Wedges Won highly esteemed and widely trusted at home and abroadConverse Red Chuck Taylor All Star Asylum Mid Sneaker (Unisex) Sneakers , Sasch Beige Sas Tripad Comfort Strappy M Patent Leather Sandals , Ladies Tory Burch Tan Moore Sandals Big clearance sale ,
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.