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.Tipe E Tacchi Sandals - Women Tipe E Tacchi Sandals online on YOOX United Kingdom - 11116939BSDolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11362761NB , Armata Di Mare Boots - Men Armata Di Mare Boots online on YOOX United Kingdom - 11475165JNF.Lli Bruglia Loafers - Women F.Lli Bruglia Loafers online on YOOX United Kingdom - 11517879XCCatarina Martins Loafers - Women Catarina Martins Loafers online on YOOX United Kingdom - 11002729OM , Peperosa Ankle Boot - Women Peperosa Ankle Boots online on YOOX United Kingdom - 11481750AJ , LADY Balenciaga Blue/Cream Platforms Excellent valueWOMEN Tory Burch White "Thong" Sandals New products in 2314 , Pieces | Pieces Slider With Cutaway Insertsman/woman Cordani Beckie Boots Excellent stretchingman/woman Blowfish Bungalow Sandals Fine artmen's/women's IZOD Damiano Loafers Modern designPavement AVA LOOP - Slip-ons , Adidas Vans OLD SKOOL - Trainers - pewter/marshmallow , mens/womens Bruno Magli Pittore Loafers Fashion versatile shoesman/woman Roper Pierce Boots First batch of customers , Kennel + Schmenger LIZ - Boots Colour: schwarzAdidas adidas Originals NIZZA SLIP ON - Slip-ons - footwear white , man/woman KENDALL + KYLIE Rae 2 Sneakers & Athletic KENDALL + KYLIE Outstanding functionman/woman Polo Ralph Lauren Faxon Low Sneakers & Athletic Polo Ralph Lauren Moderate costmens/womens Native Shoes Apollo Moc Sneakers & Athletic Native Shoes Rich on-time deliveryDeimille Court - Women Deimille Courts online on YOOX United Kingdom - 11550972TU , Red(V) Ankle Boot - Women Red(V) Ankle Boots online on YOOX United Kingdom - 11211881WR , Tod's Flip Flops - Women Tod's Flip Flops online on YOOX United Kingdom - 11431109VQFrye Ankle Boot - Women Frye Ankle Boots online on YOOX United Kingdom - 11108564VW , Giuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11215377DF , Pantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11569838GCSpeed refund Hi-Tec Bandera Mid WPBuscemi Wheat Nubuck/Wheat 125mm Fringe Stud Sneakers , woman adidas Black Eqt Sneakers New market ,
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.