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.Twin-Set Simona Barbieri Court - Women Twin-Set Simona Barbieri Courts online on YOOX United Kingdom - 11484779WM , Janet Sport Ankle Boot - Women Janet Sport Ankle Boots online on YOOX United Kingdom - 11495787BEPretty Ballerinas Ballet Flats - Women Pretty Ballerinas Ballet Flats online on YOOX United Kingdom - 11456136SV , men/women New Balance Classics WL696v1 Sneakers & Athletic New Balance Classics Elegant and sturdy packagingGiancarlo Paoli Loafers - Women Giancarlo Paoli Loafers online on YOOX United Kingdom - 11309317PPSonia Rykiel Sneakers - Women Sonia Rykiel Sneakers online on YOOX United Kingdom - 11454633RG , Liu •Jo Shoes Open-Toe Mules - Women Liu •Jo Shoes Open-Toe Mules online on YOOX United Kingdom - 11369495FX , XxWnVxTF men/women Born Caracas Sandals Selling , Alain Tondowski Ankle Boot - Women Alain Tondowski Ankle Boots online on YOOX United Kingdom - 11499198AS , LINCE 75330 Arena WEDGE-HEEL SANDALS FOR WOMENHUGO THATOZ - Trainers - blackSKECHERS Relaxed Fit?: Reggae - Vesalo , man/woman Mephisto Rufo Sneakers & Athletic Mephisto Great varietyHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11580436AF , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11569246IQTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11038146XD , man/woman Sperry Decoy Boot Boots We have won praise from our customers.Adidas Crocs CLASSIC MAMMOTH LUXE RADIANT - Slippers - rose dustAdidas Ted Baker NOVELY - High heeled ankle boots - black , Versus Versace Sneakers - Men Versus Versace Sneakers online on YOOX United Kingdom - 11465374AT , Adidas Dune London WIDE FIT WIDE FIT CASANDRAA - Classic heels - brownmens/womens Think! Julia - 80348 Sandals Let our products go to the world , Tod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11570185JAGeox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11541925DP , Puma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11495630TWBetti Oliva Court - Women Betti Oliva Courts online on YOOX United Kingdom - 11529435WX , Diesel Ankle Boot - Women Diesel Ankle Boots online on YOOX United Kingdom - 11535520NK , Laure Chamorel Court - Women Laure Chamorel Courts online on YOOX United Kingdom - 11256301HT , Jimmy Choo Court - Women Jimmy Choo Courts online on YOOX United Kingdom - 11528138NBGiuseppe Zanotti Green Rs5115 Studded Suede/Leather Women's High Top Sneaker Sneakers ,
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.