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.Pretty Ballerinas Ballet Flats - Women Pretty Ballerinas Ballet Flats online on YOOX United Kingdom - 11192548WL , Isabel Marant Étoile Espadrilles - Women Isabel Marant Étoile Espadrilles online on YOOX United Kingdom - 11543318XJ , Peter Non Loafers - Women Peter Non Loafers online on YOOX United Kingdom - 11036091DJNunn Bush Middleton Plain Toe ChukkaDIGu6pAZ Men/Women Jambu Hemlock Boots wonderfulPuma Platform Boot Wn's - Ankle Boot - Women Puma Ankle Boots online on YOOX United Kingdom - 11380939LV , New Balance Fresh Foam Lazr Sport - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11470666KKNew Balance 574 Art School - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11333592TRadidas Silver Grey Nmd R1 W Womens Metal S76004 Sneakers , adidas Y-3 by Yohji Yamamoto Shishu Stanmen's/women's xyxyx Ankle boots Colour: navy Customer firstmens/womens Office SORINA - Mules good quality , men's/women's UNIONBAY Pacific Sneakers & Athletic UNIONBAY Clearance , mtng ELSA - Cowboy/Biker boots Colour: dise black , Tod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11569993PE , D.A.T.E. Sneakers - Men D.A.T.E. Sneakers online on YOOX United Kingdom - 11233318TG , Cappelletti Sneakers - Men Cappelletti Sneakers online on YOOX United Kingdom - 11497769CL , men/women Converse Skate Breakpoint Pro Ox Sneakers & Athletic Converse Skate Skilled manufacturing , L'arianna Court - Women L'arianna Courts online on YOOX United Kingdom - 11134099HB , Natan Court - Women Natan Courts online on YOOX United Kingdom - 11474392GABikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 11522006VLZamagni Ankle Boot - Women Zamagni Ankle Boots online on YOOX United Kingdom - 11349964PURoger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 44994017THValentino Garavani Sandals - Women Valentino Garavani Sandals online on YOOX United Kingdom - 11212523VT , Vicini Tapeet Sandals - Women Vicini Tapeet Sandals online on YOOX United Kingdom - 11420414KCFratelli Rossetti Loafers - Women Fratelli Rossetti Loafers online on YOOX United Kingdom - 11332881TN , Emanuela Passeri Loafers - Women Emanuela Passeri Loafers online on YOOX United Kingdom - 11444634GC , Vince Gray Rita Leather Block Heel SandalsLADY A. Giannetti Coral Wedges Bright colorsMISS Sole Society Delilah Sandals Qualified production ,
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.