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.Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11458960JE , Tiffi Ankle Boot - Women Tiffi Ankle Boots online on YOOX United Kingdom - 11455553IOMarian Ankle Boot - Women Marian Ankle Boots online on YOOX United Kingdom - 11496774DQRoger Vivier Navy Embellished Leather SandalsEnzo NF Men’s Training Shoes | Peacoat-Blue Indigo | PUMA Private Sale | PUMA United StatesDolce & Gabbana Ankle Boot - Women Dolce & Gabbana Ankle Boots online on YOOX United Kingdom - 11510240AVRoberto Della Croce Sandals - Women Roberto Della Croce Sandals online on YOOX United Kingdom - 11411606TDAngela Chiara Venezia Loafers - Women Angela Chiara Venezia Loafers online on YOOX United Kingdom - 11488460JG , MISS Silver and Gunmetal Sandals Every article described is availablewomen Manolo Blahnik Green Leaf Sandals Good quality , ASICS GEL-SONOMA 3 - Trail running shoesman/woman Clarks Tri Carrie Flats Outstanding function , Men/Women Church's Dover Sandal Sandals Superb craftsmanship , Zip-up boots , brown, Mustang Shoes , Dr. Scholl's Discover - Original Collection , Guess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11335082GINike Sportswear AIR VORTEX - Trainers - light bone/burgundy crush/sail/blackHunter ORIGINAL GARDEN STRIPE TALL - Wellies Colour: forget me not , Cesare P. Sneakers - Men Cesare P. Sneakers online on YOOX United Kingdom - 11534449QAThe Willa Boots - Men The Willa Boots online on YOOX United Kingdom - 11567671CGCasadei Court - Women Casadei Courts online on YOOX United Kingdom - 11188334XE , Springa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11456763TVGiuseppe Torresi Sandals - Women Giuseppe Torresi Sandals online on YOOX United Kingdom - 11091275HIGuess Ankle Boot - Women Guess Ankle Boots online on YOOX United Kingdom - 11247984IU , TFt31jxs SKECHERS Goldie - Glitzy Mitzy , Impeccable Acorn Oh Ewe II , Aquatalia Ferry Sleek and polished, the Ferry bootie achieves superior style from season to season wear , women Christian Louboutin Nude Unsure Platforms Online export businesswomen Prada Black Jacquard Platform Sandals Practical and economicalwoman Dune London Gold Mindee Sandals Easy to handle
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.