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.Stuart Weitzman Ankle Boot - Women Stuart Weitzman Ankle Boots online on YOOX United Kingdom - 11481817BB , Fabrizio Chini Ankle Boot - Women Fabrizio Chini Ankle Boots online on YOOX United Kingdom - 11536591OQPhilipp Plein Ballet Flats - Women Philipp Plein Ballet Flats online on YOOX United Kingdom - 11454497GG , L' Autre Chose Court - Women L' Autre Chose Courts online on YOOX United Kingdom - 11485022TH , Christopher Kane Sneakers - Women Christopher Kane Sneakers online on YOOX United Kingdom - 11520686LS , UNISA Kriyu_sp FASHION SANDALS FOR WOMENDibrera By Paolo Zanoli Ankle Boot - Women Dibrera By Paolo Zanoli Ankle Boots online on YOOX United Kingdom - 11445279ICTwin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11182978TO , Steve Madden Diva Pump - Court - Women Steve Madden Courts online on YOOX United Kingdom - 11438850SD , mens/womens Kamik Yukon 6 Boots Complete specificationsmen/women Born Virgo Loafers Stylish and funColumbia Peakfreak XCRSN II Xcel Low Outdry?mens/womens Pikolinos Porto W6J-5804 Boots auctionmen/women Matisse Montauk Sandals Quality First , man/woman Michael Antonio Morris Boots Onlinemen's/women's SKECHERS Granola Missus Hippie Sandals main category , Geox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11564758DHmens/womens ASICS Hypersprint? 5 Sneakers & Athletic ASICS cheap priceJohn Murphy Loafers - Men John Murphy Loafers online on YOOX United Kingdom - 11484713HVMaldini 7450 - Loafers - Men Maldini Loafers online on YOOX United Kingdom - 11419848JL , Adidas Salomon X ULTRA 3 GTX - Hiking shoes - magnet/black/mineral red , P448 Sneakers - Women P448 Sneakers online on YOOX United Kingdom - 11457141WX , Malìparmi Loafers - Women Malìparmi Loafers online on YOOX United Kingdom - 11131722IUSax Sneakers - Women Sax Sneakers online on YOOX United Kingdom - 11416288PQFabi Sandals - Women Fabi Sandals online on YOOX United Kingdom - 11439343SQHenry Smith Boots - Men Henry Smith Boots online on YOOX United Kingdom - 11574426FK2BVXIa13 DORKING D-6604 SHOES FOR WOMEN , Blowfish Verde Step into style with the smooth Blowfish Verde boots , Prada Nero (Black) Lux 3e4360 Naplax SneakersLADY Christian Louboutin Grekoronda Sandals Fine workmanship
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.