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.L' Autre Chose Loafers - Women L' Autre Chose Loafers online on YOOX United Kingdom - 11212767EI , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11035221RL , Tosca Blu Shoes Ankle Boot - Women Tosca Blu Shoes Ankle Boots online on YOOX United Kingdom - 11497615WT , J|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11508482NSVans X Karl Lagerfeld Sneakers - Men Vans X Karl Lagerfeld Sneakers online on YOOX United Kingdom - 11484163AHGolden Goose Deluxe Brand Sneakers - Men Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11506654FK , LADY Cole Haan Purple Larissa Sandals Let our goods go out into the world , WOMENS Very Volatile Coral Sandals At an affordable price , lady Tsubo Ice/Berry Sporty-chic Sandals Quality and quantity guaranteed , Birkenstock ARIZONA - Slippers Colour: desert soil espressoAdidas River Island Sandals - red , men's/women's Jessica Simpson Mikaela Flats economicmen's/women's Think! 82256 Boots excellent qualitymen's/women's Frye Luke Oxford Oxfords Cheap , Oscar de la Renta Romy 90mm , EGO SELINA - High heeled ankle bootsQuattrobarradodici Sneakers - Men Quattrobarradodici Sneakers online on YOOX United Kingdom - 11573737OSSantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11487980EODiesel Sneakers - Men Diesel Sneakers online on YOOX United Kingdom - 11534644UV , Adidas KENDALL + KYLIE EDISON - Ankle boots - black regal matte , Jimmy Choo Sneakers - Men Jimmy Choo Sneakers online on YOOX United Kingdom - 11463689QDCarrano Sandals - Women Carrano Sandals online on YOOX United Kingdom - 11268527NHMarsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11460134FR , Sensunique Ankle Boot - Women Sensunique Ankle Boots online on YOOX United Kingdom - 11508439HB , Yosh Collection Court - Women Yosh Collection Courts online on YOOX United Kingdom - 11222212NRNicholas Kirkwood Court - Women Nicholas Kirkwood Courts online on YOOX United Kingdom - 11474758BSGuarantee quality and quantity Rieker 44494 Simona 94Authentic guarantee Giorgio Brutini Kitts , Foamtreads Physician Swollen feet are no longer an issue when the Foamtreads Physician takes care of youladies LifeStride Silver Sandals Highly appreciated and widely trusted in and out
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.