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.Nr Rapisardi Ankle Boot - Women Nr Rapisardi Ankle Boots online on YOOX United Kingdom - 11504889FP , Fratelli Rossetti Open-Toe Mules - Women Fratelli Rossetti Open-Toe Mules online on YOOX United Kingdom - 11440620OS , L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11384030NDReebok Workout Lo Plus - Sneakers - Women Reebok Sneakers online on YOOX United Kingdom - 11567317VR , Just Cavalli Court - Women Just Cavalli Courts online on YOOX United Kingdom - 11334753RB , Roger Vivier Black De Nuit Pumps , George J. Love Ankle Boot - Women George J. Love Ankle Boots online on YOOX United Kingdom - 11537844HT , NIFTY Deportivo Nifty Negro 3332 LOW-TOP TRAINERS FOR WOMENlady ZIGI NEW YORK Proxy Platforms special offer , Adidas RAS Mules - emerald/multicolormens/womens Trotters Sizzle Signature Flats New varieties are launchedmen/women Even&Odd Ankle boots Colour: black negotiationSIKSILK VITOR FLYKNIT - Trainers - tealDsquared2 Boots - Men Dsquared2 Boots online on YOOX United Kingdom - 11069017DTVagabond Shoemakers Boots - Men Vagabond Shoemakers Boots online on YOOX United Kingdom - 11379252NT , Neil Barrett Sneakers - Men Neil Barrett Sneakers online on YOOX United Kingdom - 11522205PPman/woman New Balance Strobe Sneakers & Athletic New Balance Different styles and stylesSoher Sandals - Women Soher Sandals online on YOOX United Kingdom - 11460540AU , Pokemaoke Loafers - Women Pokemaoke Loafers online on YOOX United Kingdom - 11501657IP , Elisa Mey® Sandals - Women Elisa Mey® Sandals online on YOOX United Kingdom - 11559171NH , Giuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11257359JM , Carolina Herrera Brown Casual Sneakers Sneakers , lady Versace Madonna Campaign Wedges Modern , Reliable performance Josef Seibel Sofie 29 , Adequate supply and timely delivery Ariat Western Heritage , Saint Laurent White 'court Classic Sea Sex & Sun' Sneakers Sneakers , Kenneth Cole Reaction Lime Green Slip On Heel Sandals , WOMENS Stuart Weitzman Black City Sandals quality QueenWomen's Miu Miu Retro Brown Sandals New marketwoman Vionic Cream Paros Sandals Flagship store
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.