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.Maison Margiela Open-Toe Mules - Women Maison Margiela Open-Toe Mules online on YOOX United Kingdom - 11472129OV , BRYAN STEPWISE 16005 SHOES FOR WOMENSuperga 2750-EFGLU black / White , Oscar De La Renta Court - Women Oscar De La Renta Courts online on YOOX United Kingdom - 11475548SP , Loretta By Loretta Ankle Boot - Women Loretta By Loretta Ankle Boots online on YOOX United Kingdom - 11506200JUGolden Goose Deluxe Brand Sneakers - Women Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11507081AL , Vans X Karl Lagerfeld Sneakers - Men Vans X Karl Lagerfeld Sneakers online on YOOX United Kingdom - 11484163AH , ladies Giuseppe Zanotti Black Gladiator Sandals Low price , men's/women's Naturalizer Jarrett Boots Exquisite (middle) workmanship , Men/Women Jessica Simpson Purella Heels Crazy price , Men/Women Blowfish Becha Sandals Special purchaseMatisse Coconuts by Matisse - DecoCARLOS by Carlos Santana Taos 2 , SKECHERS Ultra Flex - Free Spirits , man/woman Soludos Woven Fisherman Sandal Sandals Excellent workmanshipHey Dude Sneakers - Men Hey Dude Sneakers online on YOOX United Kingdom - 11545418ANLeonardo Principi Boots - Men Leonardo Principi Boots online on YOOX United Kingdom - 11541869QNGuess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11493220AWVic Matiē Boots - Women Vic Matiē Boots online on YOOX United Kingdom - 11457590KQ , Cesare Paciotti Sandals - Women Cesare Paciotti Sandals online on YOOX United Kingdom - 11386381ER , Minnetonka Mosaic - Loafers - Women Minnetonka Loafers online on YOOX United Kingdom - 11227493WS , Chloé Ankle Boot - Women Chloé Ankle Boots online on YOOX United Kingdom - 11285940QM , Marco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11499298XWBurberry Black Leather Plaid Trim Sandals , B Brian Atwood Silver Kendyll SandalsCRO66G9L Jerusalem Sandals Aviv - Womens , wonderful Romika Mokasso 202 Gladies Christian Louboutin Red/Gold/Silver Foxtrot Platforms High quality and low effort , Harajuku Lovers Cream Kogal High Top Sneaker Sneakers , Ladies Prada Nude/Cipria Vernice 2 Wedges Customer first ,
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.