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.I.N.K. Shoes Ankle Boot - Women I.N.K. Shoes Ankle Boots online on YOOX United Kingdom - 11475610WERocco P. Ankle Boot - Women Rocco P. Ankle Boots online on YOOX United Kingdom - 11363525FQ , L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11371521PV , Chippewa 6" 55161 WP Comp Toe , Nunn Bush Gordy Plain Toe OxfordKendall + Kylie Ankle Boot - Women Kendall + Kylie Ankle Boots online on YOOX United Kingdom - 11324182PBMISS Nanette Lepore Blue Multi Platforms Latest technology , CLARKS Petrina Selma WEDGE-HEEL SANDALS FOR WOMEN , woman Giuseppe Zanotti Tan Sneakers Excellent performancemens/womens Spring Step Allenisa Heels Modern technologyman/woman Tahari Dance Sandals Known for its excellent quality , Emporio Armani ADRIA DALLAS - Trainers Colour: blackJoshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11265218KC , men's/women's Sperry Endeavor CVO Leather Sneakers & Athletic Sperry Popular recommendation , men's/women's Sol Sana Fox Boot II Boots Popular tide shoes , men's/women's Rochas RO30031-07025 Clogs & Mules Modern and elegant fashionAngelo Pallotta Boots - Men Angelo Pallotta Boots online on YOOX United Kingdom - 11509599PSSergio Rossi Sneakers - Men Sergio Rossi Sneakers online on YOOX United Kingdom - 11284909RW , Dr. Martens Boots - Men Dr. Martens Boots online on YOOX United Kingdom - 11465762KFKudetà Court - Women Kudetà Courts online on YOOX United Kingdom - 11515810AEStrategia Boots - Women Strategia Boots online on YOOX United Kingdom - 11475467UC , Mackintosh Ankle Boot - Women Mackintosh Ankle Boots online on YOOX United Kingdom - 11537440CG , Rick Owens Sandals - Women Rick Owens Sandals online on YOOX United Kingdom - 11515930SU , Chiarini Bologna Boots - Women Chiarini Bologna Boots online on YOOX United Kingdom - 11534311MIPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11478582AWChiara Ferragni Espadrilles - Women Chiara Ferragni Espadrilles online on YOOX United Kingdom - 11337155NWBirkenstock Black Papillio Dorothy In SandalsStylish and charming L'Amour Des Pieds Taimah , Born Fredrika Born brings you a look that's as versatile as it is chic with the Fredrika bootie , Aetrex Brenda Get to know the Brenda sandal, a style that's the perfect amount of sass
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.