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.Pons Quintana Ankle Boot - Women Pons Quintana Ankle Boots online on YOOX United Kingdom - 11255254BWGuido Sgariglia Ankle Boot - Women Guido Sgariglia Ankle Boots online on YOOX United Kingdom - 11546838JMDivine Follie Ankle Boot - Women Divine Follie Ankle Boots online on YOOX United Kingdom - 11562912QUSuecomma Bonnie Chiffon Ruffle Detailed Sandals , MTNG 90179 C5531 Rustico CueroWOMENS Birkenstock Black/Tan Sandals Online sales , MISS Bandolino Camel Sandals Flagship store , TSUGI Apex Blck Men's Sneakers | Quarry-Puma Black | PUMA Training + Gym | PUMA United StatesSjp By Sarah Jessica Parker Ballet Flats - Women Sjp By Sarah Jessica Parker Ballet Flats online on YOOX United Kingdom - 11477332KWNew Balance 300 Tier 2 Leather - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11467050MXTipe E Tacchi Ankle Boot - Women Tipe E Tacchi Ankle Boots online on YOOX United Kingdom - 11517009QVPalomitas By Paloma Barceló Espadrilles - Women Palomitas By Paloma Barceló Espadrilles online on YOOX United Kingdom - 11418527QTWomen's Ivy Kirzhner Blush Gardenia Sandals Easy to clean surface , lady Dolce Vita Orange Wedges Popular tide shoes , Rockport Total Motion Sports Dress Woven OxfordClaudia Ciuti Platinum Gold Gigi Sandal Sneakers , Nike Gray / Neon Coral 5.0 Sneakersmen's/women's Matisse Lambert Boots Excellent functionmens/womens Ahnu Sugarpine Sneakers & Athletic Ahnu high quality , Men/Women ALDO Sigrun-R Sneakers & Athletic ALDO buy online , Men/Women Chinese Laundry Palma Sandal Sandals Good design , Men/Women Steve Madden Viv Sandals a wide variety of goods , Desigual Sandals - Women Desigual Sandals online on YOOX United Kingdom - 11440072MF , Keys Espadrilles - Women Keys Espadrilles online on YOOX United Kingdom - 11553063NMLe Ble Court - Women Le Ble Courts online on YOOX United Kingdom - 11523069QUElisa Mey® Sandals - Women Elisa Mey® Sandals online on YOOX United Kingdom - 11561924WPSantoni Ballet Flats - Women Santoni Ballet Flats online on YOOX United Kingdom - 11542232TAngsla8eg PUMA Tsugi Netfit V2 Firecracker , Popular tide shoes Spring Step Haleema , WOMENS Nike Black Sky High Sneakers Has a long reputation ,
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.