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.Demna Gvasalia Ankle Boot - Women Demna Gvasalia Ankle Boots online on YOOX United Kingdom - 11278732KJ , Tosca Blu Shoes Court - Women Tosca Blu Shoes Courts online on YOOX United Kingdom - 11468139MT , Patrizia Motta Flip Flops - Women Patrizia Motta Flip Flops online on YOOX United Kingdom - 11504204CO , Andrea Morando Ankle Boot - Women Andrea Morando Ankle Boots online on YOOX United Kingdom - 11525238HF , C.DOUX 6855 BOTíN PLANO DE MUJERWIKERS 5836 PLATFORM ESPADRILLES FOR WOMENSperry Top-Sider Captain's Cvo Nautical - Sneakers - Men Sperry Top-Sider Sneakers online on YOOX United Kingdom - 11472286GL , Halston Purple/Green/Pink with Red Leather Straps Evening Collection...made In Italy SandalsUP TO YOU 4306 Kaki FASHION ANKLE BOOTS FOR WOMEN , Barneys New York Black Suede High-heel Peep-toe Ankle-strap SandalsCole Haan Turquoise Beige Summer with Kitten Heel SandalsWOMENS Tory Burch Black Thora Sandals Popular tide shoesXTI 47327 C Negro FASHION FOOTWEAR FOR WOMENman/woman Joe's Jeans Celina Boots High-quality materialsmen's/women's SAS Diplomat Loafers Many varietiesLaura Biagiotti Mules Colour: grey mirrorClarks BATCOMBE TOP - Classic ankle boots Colour: dark tanBalenciaga Court - Women Balenciaga Courts online on YOOX United Kingdom - 11537296MH , men's/women's Easy Spirit Isie Sneakers & Athletic Easy Spirit Long-term reputationGuess Court - Women Guess Courts online on YOOX United Kingdom - 11547190THKatia G. Loafers - Women Katia G. Loafers online on YOOX United Kingdom - 11533818DW , Pedro García Sandals - Women Pedro García Sandals online on YOOX United Kingdom - 11174718WVTom Ford Boots - Women Tom Ford Boots online on YOOX United Kingdom - 11395032VSWomen's Casadei Beige Formal Shoes High-quality , eDWYFDqI DORKING D6604 SHOES FOR WOMEN , Lightweight shoes Bill Blass Sutton Slip-On , Cost-effective Levi's Shoes Tustin Denim , SKECHERS Hampshire Achieve a state of warmth, comfort, and style in chilly weather with the SKECHERS Hampshire boot!LADY Isabel Marant Red Idk Sneakers Attractive fashion , woman Tory Burch Pink 48255 Sandals Online shop ,
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.