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.Giancarlo Paoli Ankle Boot - Women Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11479391LGVic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11015201SACesare Paciotti 4Us Sneakers - Men Cesare Paciotti 4Us Sneakers online on YOOX United Kingdom - 11483057GOTipe E Tacchi Sneakers - Women Tipe E Tacchi Sneakers online on YOOX United Kingdom - 11490478BLLOW WEST 1001 FASHION ANKLE BOOTS FOR WOMENLACOSTE Carnaby Evo 318-2 LOW-TOP TRAINERS FOR WOMEN , Barneys New York Brown Studded Fringe In Sandals , PLUMERS 5686 FASHION ANKLE BOOTS FOR WOMEN , womens Black and Silver Platforms Excellent valueWomen's Vera Wang Gold Simply Sandals Cheap , mens/womens Spring Step Endear Boots High-quality materialsmen/women David Tate Whisper Heels Fashion pattern , men/women Onex Maggy Heels Packaging diversitymens/womens Lacoste Laccord 217 1 Oxfords Elegant and solemnMen/Women Even&Odd Ankle boots Known for its excellent qualityTommy Jeans FLEXIBLE CASUAL SLIP ON - Espadrilles Colour: light blue , Giuseppe Zanotti Loafers - Men Giuseppe Zanotti Loafers online on YOOX United Kingdom - 11550348AX , mens/womens New Balance Classics WRT300v1 Sneakers & Athletic New Balance Classics International big namemen's/women's ECCO Jeremy Brogue Tie Sneakers & Athletic ECCO Known for its beautiful qualityBallin Sandals - Women Ballin Sandals online on YOOX United Kingdom - 11576226WT , Casadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11507903SK , Vic Matiē Boots - Women Vic Matiē Boots online on YOOX United Kingdom - 11275313BHGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11147969NMCharlotte Olympia Sneakers - Women Charlotte Olympia Sneakers online on YOOX United Kingdom - 11488559NS , Good quality Free People Saratoga Loafer , womens Jessica Simpson Brown Js Wedges Make full use of materialsLADY Jimmy Choo Brown/White Sandals A balance between toughness and hardnesslady Camper Blue Laika Sport Platforms Famous storelady Birkenstock Taupe Arizona Suede Sandals special purchase , womens ALDO Tan Sandals Wedges Optimal price ,
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.