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.Vagabond Shoemakers Ankle Boot - Women Vagabond Shoemakers Ankle Boots online on YOOX United Kingdom - 11512851THRoger Vivier Flip Flops - Women Roger Vivier Flip Flops online on YOOX United Kingdom - 11398301IMJimmy Choo Ankle Boot - Women Jimmy Choo Ankle Boots online on YOOX United Kingdom - 11232701TX , Ruco Line Sandals - Women Ruco Line Sandals online on YOOX United Kingdom - 11334546OQ , Hummel STADIL OILED LOW blackMISS Vince Camuto Silver Sandals Stylish and funnyWomen's Nike Black & Red Sneakers trendyAdidas Gabor Over-the-knee boots - schwarz , mens/womens Sofft Cassie Heels buy online , Adidas Selected Femme SLFANN - Slip-ons - black , mens/womens Report Ameer Sneakers & Athletic Report low costecco BABETT BOOT - Winter boots Colour: moon rockMen/Women Cole Haan Landsman Bootie II Boots luxurious , Joshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11244174EHNew Look Wide Fit WIDE FIT SERENE - Classic heels Colour: blackmen/women McQ Jean Blaze Ankle Boots As of the latest modeladidas Originals | adidas Originals Court Vantage Sneakers In Blue CQ2563Salewa ALP TRAINER MID GTX - Walking boots - carbon/ringloNew Balance Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11188341GULuciano Barachini Loafers - Women Luciano Barachini Loafers online on YOOX United Kingdom - 11555624BHU.S.Polo Assn. Boots - Women U.S.Polo Assn. Boots online on YOOX United Kingdom - 11491044UK , Le Marinē Sandals - Women Le Marinē Sandals online on YOOX United Kingdom - 11502878DWRoyal Republiq Loafers - Women Royal Republiq Loafers online on YOOX United Kingdom - 11574782APBoemos Ankle Boot - Women Boemos Ankle Boots online on YOOX United Kingdom - 11577246EDVersace Jeans Sandals - Women Versace Jeans Sandals online on YOOX United Kingdom - 11453391PS , Valentino Garavani Court - Women Valentino Garavani Courts online on YOOX United Kingdom - 11454560EF , Prada Black Logo Leather Mule Sandals , qWXPL9cd LOLAS S003634343mat SHOES FOR WOMENWomen's Tory Burch Tan High Wedges Strong heat and heat resistance , lady Christian Louboutin Barcelona Wedges Win the praise of customers
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.