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.Giancarlo Paoli Ankle Boot - Women Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11541754FEElvio Zanon Ankle Boot - Women Elvio Zanon Ankle Boots online on YOOX United Kingdom - 11498623DT , Gym Red Limited Edition The Box. These Are Not Available In Stores Anymore. I Searched High and Low For Sneakers , Karl Lagerfeld Lavinia Ankle Boot Glitter - Ankle Boot - Women Karl Lagerfeld Ankle Boots online on YOOX United Kingdom - 11423955DS , Islo Isabella Lorusso Ankle Boot - Women Islo Isabella Lorusso Ankle Boots online on YOOX United Kingdom - 11471952PUJohn Varvatos ★ U.S.A. Sneakers - Men John Varvatos ★ U.S.A. Sneakers online on YOOX United Kingdom - 11440178BALadies Cole Haan Black Ravenna Wedges Consumers first , ladies Christian Louboutin Multi Color Platforms Pleasant appearanceWOMEN Marc Jacobs Grey Leather Wedges Wholesalemen/women Born Mai Floral Sandals Good qualitymen's/women's ECCO Windsor Apron Slip-On Loafers wonderful , Rockport Lead The Pack Cap Toeadidas Performance CRAZYFLIGHT X 2.0 - Volleyball shoes Colour: black , man/woman Chinese Laundry Outcast Soft Atan Loafers Personalization trendmen/women Imagine Vince Camuto Dacia 2 Heels Excellent quality , Adidas Clarks GLOVE ECHO - Trainers - white , Adidas KIOMI Ankle strap ballet pumps - blackElement PRESTON - High-top trainers - chocolateWon Hundred ROSALIE - Platform boots Colour: black , Blundstone Boots - Men Blundstone Boots online on YOOX United Kingdom - 11239849UE , Chuck taylor all star ox canvas low top trainers , black, Converse , ASICS GEL-EXCITE 4 - Neutral running shoes - black/race bluePokemaoke Sneakers - Women Pokemaoke Sneakers online on YOOX United Kingdom - 11501660LWGattinoni Ankle Boot - Women Gattinoni Ankle Boots online on YOOX United Kingdom - 11517059RO , Strategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11516758PFUnisa Ankle Boot - Women Unisa Ankle Boots online on YOOX United Kingdom - 11148968VI , Susana Traca Sandals - Women Susana Traca Sandals online on YOOX United Kingdom - 11557661UC , Valentino Red Rockstud Leather Low Top Studded Flat SneakersLadies Cole Haan Gold Resort Sandals Reliable quality , lady Escada Multicolor Formal Shoes Moderate costs
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.