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.Donna Più Ankle Boot - Women Donna Più Ankle Boots online on YOOX United Kingdom - 11313586CLNila & Nila Boots - Women Nila & Nila Boots online on YOOX United Kingdom - 11474223UT , Adidas Originals Pod-S3.1 - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11568054AIIrish Setter Rutmaster 2.0 Lite 4896 , WOMEN Prada Metallic Gold Wedges Win highly appreciated , Women's Aquazzura Neutral Rainbow Back-tie Sandals Quality firstWOMENS Cole Haan Mauve Platforms New design , mens/womens Calvin Klein Grayce Heels Acknowledgement feedback , Donna Carolina High-top trainers Colour: poncho neromen's/women's Adidas DEERUPT RUNNER Schuhe High-quality , men's/women's VOLATILE Isobel Sandals Exquisite processing , La Sportiva AKYRA GTX - Trail running shoes Colour: blackmen's/women's Base London Floyd Boots Elegant and sturdy packagingUnder Armour ULTIMATE SPEED NM - Sports shoes , Joshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11519817XLDoucal's Boots - Men Doucal's Boots online on YOOX United Kingdom - 11101231UASantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11284002AQ , Dorothy Perkins Wide Fit WIDE FIT RAZZLE - High heeled sandals , Lost Ink VAMP BACK HEELED BOOT - High heeled boots Colour: brown , man/woman Tommy Hilfiger Payton Sneakers & Athletic Tommy Hilfiger Easy life , Tiffi Court - Women Tiffi Courts online on YOOX United Kingdom - 11502568VBLoretta Pettinari Boots - Women Loretta Pettinari Boots online on YOOX United Kingdom - 11479892DEPeter Flowers Boots - Women Peter Flowers Boots online on YOOX United Kingdom - 11533319FQreasonable price Chippewa Apache LoggerNaot Luga The Luga is part of the Naot Koru/Creation Collection and runs as a Medium Width. , Naturalizer Carrigan Hit the pavement in true street style wearing the Naturalizer Carrigan high-top sneakerCarrucci Bogart Your stride has never looked so confident. The Bogart will help you achieve fashion greatness, all in one dapper dress shoewomens Escada Black Suede 35.5/5.5 Sandals Elegant and stable packaging , Ladies Prada Fumo Calzature Donna Sneakers Suitable for colorMISS Prada Black Mesh Platforms Orders are welcome ,
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.