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.Guido Sgariglia Ankle Boot - Women Guido Sgariglia Ankle Boots online on YOOX United Kingdom - 11538119CK , Aldo Castagna Ankle Boot - Women Aldo Castagna Ankle Boots online on YOOX United Kingdom - 11488403WG , Ash Ballet Flats - Women Ash Ballet Flats online on YOOX United Kingdom - 11525690UH , PORRONET 2449 WEDGE-HEEL SANDALS FOR WOMEN , LACOSTE Marice FLAT ESPADRILLES FOR WOMEN , Palomitas By Paloma Barceló Sandals - Women Palomitas By Paloma Barceló Sandals online on YOOX United Kingdom - 11474723NW , J|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11508500IO , Eric Javits Tan/Multi Maribel Studded Leather Slide On Sandals , men's/women's Reef Twisted Sky Sandals Complete specificationmens/womens David Tate Simplicity Boots Great choiceTWINSET ANFIBIO - Cowboy/Biker boots Colour: nero , Men/Women ALDO Strongric Oxfords Low price , Men/Women Kenneth Cole Reaction Cherry Boots Used in durabilityBoxfresh KENRIC - High-top trainers - greyBrador Sneakers - Men Brador Sneakers online on YOOX United Kingdom - 11474618BH , Nike Performance PHANTOMX 3 ACADEMY DF TF - Astro turf trainersman/woman Rocket Dog Gummy Sneakers & Athletic Rocket Dog elegantArmani Jeans Sneakers - Men Armani Jeans Sneakers online on YOOX United Kingdom - 11441690QKRas Loafers - Women Ras Loafers online on YOOX United Kingdom - 44712288RC , Ebarrito Loafers - Women Ebarrito Loafers online on YOOX United Kingdom - 11555140FH , Joshua*S Sneakers - Women Joshua*S Sneakers online on YOOX United Kingdom - 11321114LS , Giuseppe Zanotti Boots - Women Giuseppe Zanotti Boots online on YOOX United Kingdom - 11047241UU , Tommy Jeans Sandals - Women Tommy Jeans Sandals online on YOOX United Kingdom - 11484193PC , Ash Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11477166QF , Alaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11262851KGRoger Vivier Black Patent Leather Sandals , a good reputation in the world M&F Western Roxy , GUESS Zachary Rock out a retro vibe in the GUESS Zachary sneaker , Lacoste Purple & White Leather Sneakers Nwot Sneakers , ladies Brian Atwood Black Scarpa/Maniac Platforms brand ,
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.