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.Bruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11287789UNAnna F. Ankle Boot - Women Anna F. Ankle Boots online on YOOX United Kingdom - 11317389HHWhat For Ankle Boot - Women What For Ankle Boots online on YOOX United Kingdom - 11540299KVman/woman Taos Footwear Retro Star Sneakers & Athletic Taos Footwear a good reputation in the worldBy A. Boots - Women By A. Boots online on YOOX United Kingdom - 11501440NE , Geox Ankle Boot - Women Geox Ankle Boots online on YOOX United Kingdom - 11519787FBNike Lilac Airforce 1 Hightops SneakersBoc4uQQc men's/women's VIONIC Becca Boots comfortableMuse Ice Women's Sneakers | Puma White-Puma White | PUMA Training + Gym | PUMA United StatesNew Balance 574 Winter Nubuck - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11371777LEJOHN SMITH Calea W Marino-fucsia LOW-TOP TRAINERS FOR WOMENGEOX U62d7f 00011 U Nebula C4064 Navy LOW-TOP TRAINERS , Women's Ralph Lauren Cognac Leather Wedges Win highly appreciated , LADY FitFlop Hot Cherry Rola Sandals Stylish and funnyman/woman Even&Odd Slippers Colour: pink Selling , men's/women's Aravon Danielle Loafers Used in durabilitymen's/women's Cole Haan Sylvan Boot Boots Sufficient supply , Men/Women Frye Clara Over-The-Knee Wide Boots New products in 2098 , Espadrilles Sandals - Women Espadrilles Sandals online on YOOX United Kingdom - 11424930UT , Ash Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11343815UV , Pantanetti Ankle Boot - Women Pantanetti Ankle Boots online on YOOX United Kingdom - 11468195WK , Pinko Ballet Flats - Women Pinko Ballet Flats online on YOOX United Kingdom - 11399482GF , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11559435RKPantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11569633RT , Giuseppe Zanotti Multi Color Vicini SandalsMISS adidas Stan Smith Sneakers Unique , xDqxNOb0 Sanita Original Vegan Professional ValeraKLPmKF7I Touch Ups Jasmine by DyeablesMXoiWjkc Nike Alpha Huarache Keystone Midthe most economical Durango Rebel 12" Flag ,
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.