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.Le Silla Ankle Boot - Women Le Silla Ankle Boots online on YOOX United Kingdom - 11527234TR , Mm6 Maison Margiela Sneakers - Women Mm6 Maison Margiela Sneakers online on YOOX United Kingdom - 44914973TU , Blu Byblos Sandals - Women Blu Byblos Sandals online on YOOX United Kingdom - 11201149SKMarsell Coltello Stack Heel Asymmetric Bootwomens Silver/Glitter Formal Shoes Elegant appearance , Via Roma 15 Ankle Boot - Women Via Roma 15 Ankle Boots online on YOOX United Kingdom - 11503418RM , Dibrera By Paolo Zanoli Sneakers - Men Dibrera By Paolo Zanoli Sneakers online on YOOX United Kingdom - 11565288FH , Kendall + Kylie Sneakers - Women Kendall + Kylie Sneakers online on YOOX United Kingdom - 11429545HPLadies Reebok Black Z Strike Sneakers settlement Price , Kenneth Cole New York Brand Sneaker Fmen's/women's Sanita Clogs Colour: cognac ExportPeter Kaiser QENCE - Ankle boots , men's/women's Steven Friendsy Sandals Year-end salemens/womens Anne Klein Petria Heels Let our products go to the worldNike Performance FREE METCON - Sports shoes - universal red/white/blackRick Owens Sneakers - Men Rick Owens Sneakers online on YOOX United Kingdom - 11519989GL , Kork-Ease Sandals - Women Kork-Ease Sandals online on YOOX United Kingdom - 11460287KGStiù Boots - Women Stiù Boots online on YOOX United Kingdom - 11461440MLCharme Ankle Boot - Women Charme Ankle Boots online on YOOX United Kingdom - 11454913PW , Silvian Heach Sneakers - Women Silvian Heach Sneakers online on YOOX United Kingdom - 11475249HO , Crime London Sneakers - Women Crime London Sneakers online on YOOX United Kingdom - 11194066EPRock Spring Court - Women Rock Spring Courts online on YOOX United Kingdom - 11561232HEStrategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11570690EW , Alberto Moretti Sneakers - Women Alberto Moretti Sneakers online on YOOX United Kingdom - 11533555BPValentino Tan New Rockstud Triple-strap Sandals2eFo8PfK LOLAS S050611114bna BALLERINAS FOR WOMENselling price Wolverine Floorhand Soft Toe , Cheap order Old Gringo Caryl , Good design LADY Halston Sandals trendy , womens Anthropologie Seychelles Turquoise Studded Wedges Great classification
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.