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.Chiara Ferragni Open-Toe Mules - Women Chiara Ferragni Open-Toe Mules online on YOOX United Kingdom - 11554162RNTosca Blu Shoes Sandals - Women Tosca Blu Shoes Sandals online on YOOX United Kingdom - 11571697RQ , Gianfranco Lattanzi Ankle Boot - Women Gianfranco Lattanzi Ankle Boots online on YOOX United Kingdom - 11305843SK , Mm6 Maison Margiela Boots - Women Mm6 Maison Margiela Boots online on YOOX United Kingdom - 11469337GX , Tory Burch Boots - Women Tory Burch Boots online on YOOX United Kingdom - 11425089CRMatiko Papaya Spring Perforated Willow High Tops SneakersBRUNATE 68046 WEDGE ANKLE BOOTS FOR WOMEN , womens Gold Formal Shoes Various current designsman/woman Chinese Laundry Page Snake Heels use , man/woman Soludos Moccasin Bootie Boots Durable serviceKenneth Cole New York Design 10405men/women GUESS Caesar Sneakers & Athletic GUESS Selling new products , man/woman Steve Madden Manifest Oxfords Quality and quantity guaranteed , adidas Originals SUPERSTAR FOUNDATION - Trainers - white , Geox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11539480CT , Dsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11554238SSmen/women Blend Classic ankle boots King of the crowdmen/women Havaianas 4 Nite Flip Flops Sandals Various latest designs , Eytys Sneakers - Women Eytys Sneakers online on YOOX United Kingdom - 11054951RT"Intentionally_______." Court - Women "Intentionally_______." Courts online on YOOX United Kingdom - 11390127SQHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11440886SO , Salvatore Ferragamo Court - Women Salvatore Ferragamo Courts online on YOOX United Kingdom - 11529182RG , Loretta Pettinari Sandals - Women Loretta Pettinari Sandals online on YOOX United Kingdom - 11386493OSGaëlle Paris Sneakers - Women Gaëlle Paris Sneakers online on YOOX United Kingdom - 11463333IINeil Barrett Sneakers - Women Neil Barrett Sneakers online on YOOX United Kingdom - 11522493WEMarc Jacobs Black Patent Leather Sandals , G37j0Uog Ancient Greek Sandals Apli Eleftheria , 1vQrnsiF womens Frye Formal Shoes Discount , Air Jordan Black / Metallic Gold 1 Phat Sneakers , WOMENS Prada White & Pink Sneakers Queensland ,
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.