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.Shoe Bizz Paris Sandals - Women Shoe Bizz Paris Sandals online on YOOX United Kingdom - 11518499VJIsabel Marant Ankle Boot - Women Isabel Marant Ankle Boots online on YOOX United Kingdom - 11505259SQ , Cuoieria Ankle Boot - Women Cuoieria Ankle Boots online on YOOX United Kingdom - 11484668KH , adidas Clear Brown Nmd R1 SneakersRS-100 PC Sneakers | VaporousGray-Peacoat-StarWht | PUMA Lifestyle | PUMA United States , Jc Play By Jeffrey Campbell Sneakers - Women Jc Play By Jeffrey Campbell Sneakers online on YOOX United Kingdom - 11213039WG , 3.1 Phillip Lim Open-Toe Mules - Women 3.1 Phillip Lim Open-Toe Mules online on YOOX United Kingdom - 11463445TG , PEPE JEANS Pls90189 Jane 877 Nut Bro SANDALIA PLANA DE MUJERwoman Prada Royal Nubuck T-strap Platforms Elegant and robust packagingwoman Céline Brown Leather Espadrille Wedges Rich on-time deliveryNew Look SQUIRE - High heels Colour: white , Madden Girl BIBI - High heeled sandals Colour: silver parismen/women Sperry Bahama Fish Circle Boat Sperry AffordableNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11356704NOGordon Sneakers - Men Gordon Sneakers online on YOOX United Kingdom - 11519855MB , Moma Loafers - Men Moma Loafers online on YOOX United Kingdom - 11476603INBoemos Boots - Men Boemos Boots online on YOOX United Kingdom - 11510848TJ , Fabi Loafers - Men Fabi Loafers online on YOOX United Kingdom - 11548309KB , Under Armour CHARGED ESCAPE 2 - Neutral running shoes Colour: steel/overcast gray/flushed pink , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11326111TS , Leather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11395066UUKanna Espadrilles - Women Kanna Espadrilles online on YOOX United Kingdom - 11354415RTGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11312312NX , Elisabetta Franchi Sneakers - Women Elisabetta Franchi Sneakers online on YOOX United Kingdom - 11417095VH , Steve Madden Boots - Women Steve Madden Boots online on YOOX United Kingdom - 11523182SDFendi Metallic Gold Slide 8.5 Sandals , Prada Black Patent Wedge Thong Sandalsspecial function Chinese Laundry Wendy PumpExquisite processing Rockport Cabot Chukka , Emilio Pucci Pink Leather White Canvas Ankle Wrap Wood Metl Kitten Heels Sandals ,
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.