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.Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11492171UXRene' Caovilla Court - Women Rene' Caovilla Courts online on YOOX United Kingdom - 11332051NICrocs Khaki Wall Canvas Loafer Sneakers , Ovye' By Cristina Lucchi Ankle Boot - Women Ovye' By Cristina Lucchi Ankle Boots online on YOOX United Kingdom - 11573995BVMARIA JAEN 6128 FASHION LOAFERS FOR WOMEN , women Jimmy Choo Sandals Complete specification area , men's/women's Soft Style Rielle Heels Complete specifications , Men/Women Ivanka Trump Hellan3 Heels professional designmens/womens ALDO Venosta Heels Official websiteSteve Madden NATIVE - MulesSKECHERS EZ Flex 3.0 Sweet GardenVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11220228FC , Imac Boots - Men Imac Boots online on YOOX United Kingdom - 11551574HLman/woman Lacoste Ampthill 218 1 Sneakers & Athletic Lacoste Personalization trend , Carrano Sandals - Women Carrano Sandals online on YOOX United Kingdom - 11268583PXIshikawa Sneakers - Women Ishikawa Sneakers online on YOOX United Kingdom - 44851849OQFiorifrancesi Sandals - Women Fiorifrancesi Sandals online on YOOX United Kingdom - 11164138GT , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11478253PX , Ebarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11533820FIFiorentini+Baker Ankle Boot - Women Fiorentini+Baker Ankle Boots online on YOOX United Kingdom - 11499540WGDm26 Ballet Flats - Women Dm26 Ballet Flats online on YOOX United Kingdom - 11439499TU , Tory Burch Sneakers - Women Tory Burch Sneakers online on YOOX United Kingdom - 11355359WMMalone Souliers Court - Women Malone Souliers Courts online on YOOX United Kingdom - 11235558CKDiadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11216313FW , Outstanding features Dan Post Vance , aPj16WHn ladies Valentino Peach Wedges UniquejhhFDB23 woman White Balenciaga Sneakers uppers , womens Puma Pink Suede Classic Sneakers Highly praised and appreciated by the audience of consumers , Christian Louboutin Burgundy Gondolastrass Bordeaux Gold Strass Sneaker Trainer Sneakers , Women's Sam Edelman Embellished Gladiator Sandals Bright colors
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.