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.Alberto Guardiani Ankle Boot - Women Alberto Guardiani Ankle Boots online on YOOX United Kingdom - 11488681MEJanet Sport Ankle Boot - Women Janet Sport Ankle Boots online on YOOX United Kingdom - 11517282VOManufacture D'essai Sandals - Women Manufacture D'essai Sandals online on YOOX United Kingdom - 11424266OOECCO 12025350757 LOW-TOP TRAINERS FOR WOMEN , ladies Balenciaga Black New Wedges finishing , Ovye' By Cristina Lucchi Espadrilles - Women Ovye' By Cristina Lucchi Espadrilles online on YOOX United Kingdom - 11563359AG , Agile By Rucoline Sneakers - Women Agile By Rucoline Sneakers online on YOOX United Kingdom - 11335293ECBryan Blake Flip Flops - Women Bryan Blake Flip Flops online on YOOX United Kingdom - 11467926CG , Tory Burch Brown - Tan Phoebe Wedge Sandals , LADY Manolo Blahnik Brown Heel Sandals Flagship storeWolverine Raider Multishox™ 10" Steel Toemen/women Salvatore Ferragamo Salerno Heels buy online , Adidas Kennel + Schmenger CAT - Trainers - schwarzLacoste CARNABY EVO - Trainers - black/off whiteLowa WENDELSTEIN - Walking boots Colour: braunLumberjack Boots - Men Lumberjack Boots online on YOOX United Kingdom - 11558689CS , Cantarelli Loafers - Men Cantarelli Loafers online on YOOX United Kingdom - 11375247IXmen/women Diadora Game Weave Sneakers & Athletic Diadora Caramel, gentle , Victoria Sneakers - Women Victoria Sneakers online on YOOX United Kingdom - 11546088QHGuess Court - Women Guess Courts online on YOOX United Kingdom - 11505454BC , Lemaré Sandals - Women Lemaré Sandals online on YOOX United Kingdom - 11402642NUGivenchy Espadrilles - Women Givenchy Espadrilles online on YOOX United Kingdom - 11200758LRManas Ankle Boot - Women Manas Ankle Boots online on YOOX United Kingdom - 44931190SAStella Mccartney Sandals - Women Stella Mccartney Sandals online on YOOX United Kingdom - 11402651OAErmanno Scervino Court - Women Ermanno Scervino Courts online on YOOX United Kingdom - 11535422SJGarrice Ballet Flats - Women Garrice Ballet Flats online on YOOX United Kingdom - 11559812JC , Stuart Weitzman Court - Women Stuart Weitzman Courts online on YOOX United Kingdom - 11530461HLMaison Margiela Sneakers - Men Maison Margiela Sneakers online on YOOX United Kingdom - 11564319JGLADY Marni Eggplant/Grey/Lilac Samsf83g13 Platforms DiscountLadies adidas Tubular Shadow Sneakers Sneakers From the latest model
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.