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.Thomas Roma Ankle Boot - Women Thomas Roma Ankle Boots online on YOOX United Kingdom - 11546993HQFratelli Rossetti Ankle Boot - Women Fratelli Rossetti Ankle Boots online on YOOX United Kingdom - 11558110DW , Base London Boots - Men Base London Boots online on YOOX United Kingdom - 11539095MP , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11163800CPNike Performance ZOOM FLY - Neutral running shoes Colour: glacier blue/celestial teal/coastal blue/barely rose/smokey mauve , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11478442HPLe Pepite Court - Women Le Pepite Courts online on YOOX United Kingdom - 11506804JM , dzSDg8jN Men/Women Seychelles Wrangler Boots finePEDRO MIRALLES 24824-pedro Miralles FASHION ANKLE BOOTS FOR WOMENLindsay Phillips Gold Sharyn Slide Snap 7006 Sandals , Women's Banana Republic Nude Wedges quality products , ASICS GEL-MISSION 3 - Walking trainers Colour: black/carbon/phantomOxitaly SANDRA - Classic heels Colour: mare , Men/Women Sbicca Jarrah Heels First qualitymens/womens Mephisto Helen Sandals Attractive fashionFrau Boots - Men Frau Boots online on YOOX United Kingdom - 11539263DM , Supra Sneakers - Men Supra Sneakers online on YOOX United Kingdom - 11473761RA , Adidas Nike Sportswear AIR FORCE 1 '07 - Trainers - white/black , Adidas Vero Moda VMGLORIA SHINE - Ankle boots - zinfandelNike Performance LEGEND REACT - Neutral running shoes - wolf grey/black/cool grey/pure platinumCavallini Boots - Women Cavallini Boots online on YOOX United Kingdom - 11483172UV , Logan Loafers - Women Logan Loafers online on YOOX United Kingdom - 11537729EVPedro García Sandals - Women Pedro García Sandals online on YOOX United Kingdom - 11400428QLAquazzura Ankle Boot - Women Aquazzura Ankle Boots online on YOOX United Kingdom - 11248430MK , Antonio Melani White Leather Medallion Sandalscomfortable El Naturalista Stella ND58leading the fashion CAMPER 18302-100 LOW-TOP TRAINERSBlack Gold Suede Leather M Excellent Condition Sandalslady Vince Camuto Rose Gold Sandals Moderate costs , Stuart Weitzman Amaretto Suede Roman Flat 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.