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.Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11457522UL , Jil Sander Navy Boots - Women Jil Sander Navy Boots online on YOOX United Kingdom - 11490986LN , womens Fendi Logo Platforms Price reduction , Twin-Set Simona Barbieri Sneakers - Women Twin-Set Simona Barbieri Sneakers online on YOOX United Kingdom - 11048747JC , WALK & FLY 5100-34750 WEDGE ANKLE BOOTS FOR WOMENMTNG 53829 C5748 Tar Negro FASHION SANDALS FOR WOMEN , Adidas Marc O'Polo Trainers - oliv , Adidas Zign High heels - redman/woman Matisse Can't Stop Boots discountConverse Skate One Star Pro OxMen/Women Steve Madden Laramee Boots New products in 2028Diesel S-DANNY LC II - Trainers - schwarz , Marsèll Boots - Men Marsèll Boots online on YOOX United Kingdom - 11405714XPHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11441075LU , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11088117LGmens/womens ECCO Shape 75 Chelsea Boot Boots a wide range of products , Adidas adidas Originals SWIFT RUN - Trainers - blue night/footwear whiteConverse | Converse Chuck Taylor All Star low sneakers in gray , mens/womens Rocket Dog Resort Wedge Heels Let our goods go to the world , Espadrilles Sandals - Women Espadrilles Sandals online on YOOX United Kingdom - 11578386AR , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11484499QQJudari Sneakers - Women Judari Sneakers online on YOOX United Kingdom - 11579749HSStokton Sneakers - Women Stokton Sneakers online on YOOX United Kingdom - 11371241QTDel Carlo Sandals - Women Del Carlo Sandals online on YOOX United Kingdom - 11584042NJ , Rocco P. Loafers - Women Rocco P. Loafers online on YOOX United Kingdom - 11553748LJBlugirl Blumarine Sandals - Women Blugirl Blumarine Sandals online on YOOX United Kingdom - 11571730LN , Cross Walk Sandals - Women Cross Walk Sandals online on YOOX United Kingdom - 11563045RLTod's Ankle Boot - Women Tod's Ankle Boots online on YOOX United Kingdom - 11506455MBPrada Ankle Boot - Women Prada Ankle Boots online on YOOX United Kingdom - 11276289JEPrada Black Leather & Silver Logo Buckle Heels/ Sandals ,
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.