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.Minnetonka X Maje Boots - Women Minnetonka X Maje Boots online on YOOX United Kingdom - 11448336TT , Fauzian Jeunesse Ankle Boot - Women Fauzian Jeunesse Ankle Boots online on YOOX United Kingdom - 11570517LM , See By Chloé Sandals - Women See By Chloé Sandals online on YOOX United Kingdom - 11380491UJL' Autre Chose Sneakers - Women L' Autre Chose Sneakers online on YOOX United Kingdom - 11485039XMJanet Sport Sandals - Women Janet Sport Sandals online on YOOX United Kingdom - 11287970GN24HORAS 23642 WEDGE-HEEL SANDALS FOR WOMEN , SPEED RACER Men's Running Shoes | White-Iron GateLADY ALAÏA Silver Flat Bombe Sandals Flagship storewomen Jimmy Choo Black Onix Sandals Exquisite workmanshipCARMELA 65868 FASHION ANKLE BOOTS FOR WOMEN , CHIKA10 Leonor-02 FASHION ANKLE BOOTS FOR WOMENmens/womens Rocket Dog Curious Boots cheaperMen/Women Soludos Peacock Embroidered Smoking Slipper Loafers Different styles , Adidas Senso POPPY - Heeled mules - emeraldAdidas Nike Sportswear ASHIN MODERN - Trainers - bleached coral/rust pink/summit white , man/woman Cole Haan Zerogrand Hiker Boot Boots Beautiful and charmingFilling Pieces Sneakers - Men Filling Pieces Sneakers online on YOOX United Kingdom - 11540652HNMelluso Court - Women Melluso Courts online on YOOX United Kingdom - 11535033RX , Buttero® Boots - Women Buttero® Boots online on YOOX United Kingdom - 11556183BBVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11469534DG , Diadora Sneakers - Women Diadora Sneakers online on YOOX United Kingdom - 11484000XT , Casadei Sandals - Women Casadei Sandals online on YOOX United Kingdom - 11450436IA , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11496090IX , Hogan Ankle Boot - Women Hogan Ankle Boots online on YOOX United Kingdom - 11456802IDGarrice Ankle Boot - Women Garrice Ankle Boots online on YOOX United Kingdom - 11560042HM , Manila Grace Court - Women Manila Grace Courts online on YOOX United Kingdom - 11119329STCharlotte Olympia Sandals - Women Charlotte Olympia Sandals online on YOOX United Kingdom - 11544297FV , Pantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11339373NXeK0ipl6R Merrell Siren Edge Q2 WaterproofO'Neill Pismo Craft the perfect weekend vibes with the O'Neill Pismo sandal!
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.