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.Bibi Lou Ankle Boot - Women Bibi Lou Ankle Boots online on YOOX United Kingdom - 11523028SJ , Nr Rapisardi Ankle Boot - Women Nr Rapisardi Ankle Boots online on YOOX United Kingdom - 11273722SHCharlotte Olympia Ankle Boot - Women Charlotte Olympia Ankle Boots online on YOOX United Kingdom - 11513094TDLogan Crossing Sneakers - Women Logan Crossing Sneakers online on YOOX United Kingdom - 11480458JT , Ama Brand Sneakers - Women Ama Brand Sneakers online on YOOX United Kingdom - 11511647CJ , Nike Free Tr Flyknit 3 Lm - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11551948PTLADY Stubbs & Wootton Black Wedges Average costsROCKPORT A11800-rockport ZAPATO DE SALóN PARA MUJER , BASS3D 41097 Textil Gris TRAINERS FOR WOMENwomens Balenciaga Purple 12456 Sneakers official website , Men/Women Badgley Mischka Sadie Heels Best-selling worldwidemens/womens Steven Sanne Heels High gradeDNA Footwear BV Classic ankle boots Colour: black , Chloé Loafers - Women Chloé Loafers online on YOOX United Kingdom - 11482606VFCrisci Loafers - Men Crisci Loafers online on YOOX United Kingdom - 11498614LCHogan Boots - Men Hogan Boots online on YOOX United Kingdom - 11487576GJDiadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11371879NM , Asics Sneakers - Men Asics Sneakers online on YOOX United Kingdom - 11211018SW , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11335631SAJack & Jones | Jack & Jones Leather Boot With Side ZipOnitsuka Tiger Sneakers - Men Onitsuka Tiger Sneakers online on YOOX United Kingdom - 11457267NU , Bikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 11451074DIFru.It Sandals - Women Fru.It Sandals online on YOOX United Kingdom - 11533128OOSergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11288055BDVersus Versace Sandals - Women Versus Versace Sandals online on YOOX United Kingdom - 11132300FOSpecial price ECCO Gillian Tie , Etienne Aigner Salmon Pink with White Contrast Stitching Shoes/Nib SandalsValentino Red Rockstud Leather Low Top Studded Flats Sneakers , MISS Salvatore Ferragamo Silver Formal Shoes special discount price , LADY Jimmy Choo Black Nixon Platforms in short supply
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.