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.Rodolphe Menudier Ankle Boot - Women Rodolphe Menudier Ankle Boots online on YOOX United Kingdom - 11435023RJRene' Caovilla Ballet Flats - Women Rene' Caovilla Ballet Flats online on YOOX United Kingdom - 11562011ATCamper Flip Flops - Women Camper Flip Flops online on YOOX United Kingdom - 11514588WTSalvador Ribes Sandals - Women Salvador Ribes Sandals online on YOOX United Kingdom - 11104541BD , GAIMO Nunca3 WEDGE-HEEL SANDALS FOR WOMEN , CLAUDIA 555 FASHION SANDALS FOR WOMEN , STROVER 1028 THIGH BOOTS FOR WOMEN , SKECHERS 910-burg LOW-TOP TRAINERS FOR WOMEN , Prada Black 1x3771 Cocco Mule SandalsDrkshdw By Rick Owens Boots - Women Drkshdw By Rick Owens Boots online on YOOX United Kingdom - 11430506KILADY Prada Black Elegant Comfortable Sandals Win highly appreciatedSTONEFLY Ketty 4 WEDGE-HEEL SANDALS FOR WOMENMarc Jacobs Blue Little Kids Boys Sneakers , Men/Women Romika Banja 14 Boots qualityPuma NRGY NEKO ENGINEER - Neutral running shoes , L37 EASY STYLE - Ankle boots Colour: black , Ash Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11157088FW , Crocs Ankle Boot - Women Crocs Ankle Boots online on YOOX United Kingdom - 11572194DKCross Walk Sandals - Women Cross Walk Sandals online on YOOX United Kingdom - 11564760RVFratelli Rossetti Loafers - Women Fratelli Rossetti Loafers online on YOOX United Kingdom - 11556827SASpaziomoda Ankle Boot - Women Spaziomoda Ankle Boots online on YOOX United Kingdom - 11448362CJPierre Hardy Sneakers - Women Pierre Hardy Sneakers online on YOOX United Kingdom - 11527113BLMaison Margiela Sneakers - Men Maison Margiela Sneakers online on YOOX United Kingdom - 11564417MA , Nike Red Roshe One Premium Sneakers , npUyvbHa Kenneth Cole Unlisted Design 30241 , M6P2hQCo RAS 8762-ras SHOES FOR WOMEN , Exquisite (middle) workmanship Cole Haan Emilia PumpAesthetic appearance Tretorn Nylite Bold , Big clearance sale New Balance RCVRYv1Women's Christian Louboutin Espadrilles Wedges Rich on-time delivery ,
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.