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.Le Pepite Ankle Boot - Women Le Pepite Ankle Boots online on YOOX United Kingdom - 11528377PN , Janet Sport Ankle Boot - Women Janet Sport Ankle Boots online on YOOX United Kingdom - 11467246AT , Dolce & Gabbana Loafers - Women Dolce & Gabbana Loafers online on YOOX United Kingdom - 11492251TR , George J. Love Sneakers - Women George J. Love Sneakers online on YOOX United Kingdom - 11536662UXGrey Mer Sneakers - Women Grey Mer Sneakers online on YOOX United Kingdom - 11507107KC , Prezioso Ankle Boot - Women Prezioso Ankle Boots online on YOOX United Kingdom - 11491397GK , VIGUERA 0275-vigueras WEDGE-HEEL SANDALS FOR WOMEN , Elisabetta Franchi Jeans Ankle Boot - Women Elisabetta Franchi Jeans Ankle Boots online on YOOX United Kingdom - 11270742EWDaniela Mori Milano Ballet Flats - Women Daniela Mori Milano Ballet Flats online on YOOX United Kingdom - 11525253QA , WOMEN Christian Louboutin Ivory "Simple" Pumps Nice appearance , Women's Ralph Lauren Red Wedges quality products , womens YEEZY Grey Powerphase Sneakers Qualified production , Dune London LOVEYDOVEY - Mules Colour: blushman/woman Report Piper Heels Wholesale tradeMeas leather trainers , white/black, Redskins , Lost Ink TOVE TEXTURED D'ORSAY COURT - High heels , Men/Women Free People Jackson West Boot Boots special function , Prada Sandals - Women Prada Sandals online on YOOX United Kingdom - 11179767SP , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11478018GS , H by Hudson | H By Hudson Alloa Suede Loafers In Navy , Espadrilles Sandals - Women Espadrilles Sandals online on YOOX United Kingdom - 11340379AXA.Testoni Sandals - Women A.Testoni Sandals online on YOOX United Kingdom - 11548689AD , Manuel Barceló Sandals - Women Manuel Barceló Sandals online on YOOX United Kingdom - 11538809SWLeather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11395163LCLong-term reputation Havaianas Slim Wild SandalPrimary quality Lacoste Bayliss 318 2reliable quality Clarks Calla RoseAravon Faith Sometimes it takes a little "faith" with a lot of style to make a great first impressionGrenson Blue Stingray Ethel Women's Polka Dot Leather Flats Sandals , Chinese Laundry Black with Gold Bow Ties 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.