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.Saint Laurent Ankle Boot - Women Saint Laurent Ankle Boots online on YOOX United Kingdom - 11347010LMCristina Millotti Court - Women Cristina Millotti Courts online on YOOX United Kingdom - 11457912IE , Elisabetta Franchi Court - Women Elisabetta Franchi Courts online on YOOX United Kingdom - 11326094OMPacer Next Cage Metallic Wns | Puma Black-Gold | PUMA Running + Training | PUMA United StatesNila & Nila Ankle Boot - Women Nila & Nila Ankle Boots online on YOOX United Kingdom - 11470658OU , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11565097UE , Adidas Originals Tubular Dawn W - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11369245DB , Paciotti 308 Madison Nyc Boots - Men Paciotti 308 Madison Nyc Boots online on YOOX United Kingdom - 11474851CWNew Balance 300 Suede/Mesh - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11466924RJ , MISS Cole Haan Maple Sugar Wedges Easy to clean surface , WOMENS Jeffrey Campbell Caramel Bette Wedges Buy online , MEPHISTO Brunlia Gt FASHION BOOTS FOR WOMENmen/women Merrell Enoki 2 Flip Sandals ImpeccablePapillio ARIZONA - Mules Colour: white , Versace Jeans Trainers - black , Adidas Steve Madden WEDGIE - Ankle boots - taupe , man/woman Marc Fisher LTD Valey 2 Sandals Lightweight shoes , Men/Women Ariat Cruiser Castaway Boat Ariat Practical and economical , Rockport Cobb Hill Collection Cobb Hill Penfield Zip ShoePuma Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11578920MDmen/women Shepherd ISAK - Slippers At a lower price , Oroscuro Boots - Women Oroscuro Boots online on YOOX United Kingdom - 11455379CC , Status Ballet Flats - Women Status Ballet Flats online on YOOX United Kingdom - 11548049HK , Steve Madden Court - Women Steve Madden Courts online on YOOX United Kingdom - 11464948CU , Beautiful color Steve Madden JonstenVOLATILE Glistening Step up your summertime staples in the Volatile Glistening wedge sandals , Nike Red & Black New Msrp 130 Air Max Zero Sneakers , womens Sigerson Morrison - Wedges New varieties are introduced , LADY Maison Margiela Black Az-3945 Pumps Elegant shapeGuess By Marciano Gold Jewel Encrusted Sandals ,
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.