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 - 11556270GHReebok Workout Lo Plus - Sneakers - Women Reebok Sneakers online on YOOX United Kingdom - 11567317VRHogan Ballet Flats - Women Hogan Ballet Flats online on YOOX United Kingdom - 11036952DC , SOFTEN 037s073 FASHION LOAFERS FOR WOMENAgl Attilio Giusti Leombruni Ankle Boot - Women Agl Attilio Giusti Leombruni Ankle Boots online on YOOX United Kingdom - 11546691EP , Kendall + Kylie Ankle Boot - Women Kendall + Kylie Ankle Boots online on YOOX United Kingdom - 11512697RHPellettieri Di Parma Sneakers - Men Pellettieri Di Parma Sneakers online on YOOX United Kingdom - 11505347NEwomens Stones Taupe Ant Victoria Sandals Stylish and charmingJAIME MASCARO 47514-jaime Mascaro FASHION LOAFERS FOR WOMEN , adidas White Nmd R1 Women's Sneakers Sneakers , ladies Tommy Hilfiger Checked Wedges Primary qualityWOMENS Christian Louboutin Blk Bouclette Platforms superior , Under Armour SPEEDFORM AMP 3.0 - Sports shoes Colour: black/white/blackDoucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11269385XLAttimonelli's Boots - Men Attimonelli's Boots online on YOOX United Kingdom - 11448058VGThompson Loafers - Men Thompson Loafers online on YOOX United Kingdom - 11448725PCmen/women Suecomma Bonnie Jewel Strap Mules Clogs & Mules Good designProfession: Bottier Boots - Men Profession: Bottier Boots online on YOOX United Kingdom - 11552025EL , men/women The FLEXX Sneak Name Sneakers & Athletic The FLEXX King of quantityCasadei Sandals - Women Casadei Sandals online on YOOX United Kingdom - 11396218WQ , Giuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11488651QW , Lotto Leggenda Sneakers - Men Lotto Leggenda Sneakers online on YOOX United Kingdom - 11339785WNLong-term reputation Roxy Set Session II , Contrary to the same paragraph French Sole Civil FlatAt a lower price Stacy Adams Elstonadidas White Black Stripes Sneakers Tennis 37.5 SneakersWomen's Christian Louboutin Black Slingback Wedges Primary qualityChristian Louboutin Horizon / Blue Anjali Pumps , womens Asics Pacific Blue Sneakers Optimal price , LADY Vince Black Adley Sandals Professional design ,
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.