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.O'dan Li Ballet Flats - Women O'dan Li Ballet Flats online on YOOX United Kingdom - 11547453BS , Leo Studio Design Sneakers - Women Leo Studio Design Sneakers online on YOOX United Kingdom - 11506823AM , Crime London Sneakers - Women Crime London Sneakers online on YOOX United Kingdom - 11249540LKPalomitas By Paloma Barceló Sandals - Women Palomitas By Paloma Barceló Sandals online on YOOX United Kingdom - 11338127KHWhf Weber Hodel Feder Sneakers - Men Whf Weber Hodel Feder Sneakers online on YOOX United Kingdom - 11500644TD , Alice + Olivia Black Colby Suede Heel Slide Sandals , Nike Gray Air Zoom Terra Kiger 3 Sneakers , LADY Jack Rogers Gold Snake Wedges Professional designmens/womens Coolway Athena Boots Various latest designs , men's/women's Caparros Fabulous Heels Exquisite workmanshipPuma IGNITE FLASH - Sports shoes - dark green , Skechers Performance GO WALK MAX - Walking trainers Colour: black , Men/Women Pikolinos Alhambra W4K-0881C1 Heels Big clearance sale , Florsheim Sneakers - Men Florsheim Sneakers online on YOOX United Kingdom - 11534587SLGiuseppe Zanotti Loafers - Men Giuseppe Zanotti Loafers online on YOOX United Kingdom - 11446108NP , Ebarrito Sneakers - Women Ebarrito Sneakers online on YOOX United Kingdom - 11519158KL , Ash Boots - Women Ash Boots online on YOOX United Kingdom - 11214784FJGiorgio Fabiani Court - Women Giorgio Fabiani Courts online on YOOX United Kingdom - 11478334RP , Adidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11561774RRCharlotte Olympia Loafers - Women Charlotte Olympia Loafers online on YOOX United Kingdom - 11487407CP , Td2FD444 Billabong All Day Impact Sandal , AqVNwNbG BRUNATE 40100 SHOES FOR WOMEN , Special price Stuart Weitzman Microknot SlideElegant and sturdy packaging Tabitha Simmons ReynerAlegria Eryn Embrace your fun style with the sleek and cozy Eryn slip-on , Vince Cadet Worship your incredible sense of style when you're flaunting your Vince Cadet Oxfords , Balenciaga Black Speed Logo-print Stretch-knit High-top Sneakers Sneakers , women SCHUTZ Light Tan Olyvia Sandals Different productsladies Tory Burch Orange Gold Sandals Cheap order , women Donald J. Pliner Metallic Sandals official website
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.