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.Sigerson Morrison Ankle Boot - Women Sigerson Morrison Ankle Boots online on YOOX United Kingdom - 11452740XJ , Plein Sport Sneakers - Women Plein Sport Sneakers online on YOOX United Kingdom - 11508167FR , Antonio Marras Sandals - Women Antonio Marras Sandals online on YOOX United Kingdom - 11465985TN , Wolverine Buccaneer MultiShox? 6" Waterproof , Nike Phantom VSN Club DF MGBibi Lou Flip Flops - Women Bibi Lou Flip Flops online on YOOX United Kingdom - 11116967EGLEVIS Vclu0015s Madison 0040 Navy LOW-TOP TRAINERS FOR WOMENMISS Saint Laurent Yellow/Green Bianca Sandals Rich on-time delivery , CLARKS Evie Buzz FASHION BALLERINAS FOR WOMEN , LADY Vintage Havana Gold Sneakers Most economicalBullboxer Classic ankle boots - blue , men/women MUK LUKS Violet Sandals Good world reputationThompson Loafers - Men Thompson Loafers online on YOOX United Kingdom - 11541921SEmen/women adidas Nemeziz Messi 17.3 FG Sneakers & Athletic adidas Good marketmen/women ASICS GEL-Encourage? LE Sneakers & Athletic ASICS Fine art , Dirk Bikkembergs Sneakers - Men Dirk Bikkembergs Sneakers online on YOOX United Kingdom - 44999062LJ , men's/women's Shellys London Toddy boot Boots Highly praised and appreciated by the consumer audience , Asfvlt Sneakers - Women Asfvlt Sneakers online on YOOX United Kingdom - 11506941VR , Buscemi Sneakers - Women Buscemi Sneakers online on YOOX United Kingdom - 11473090BIDevon Ankle Boot - Women Devon Ankle Boots online on YOOX United Kingdom - 11491249XSAdidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11565601OKMarian Ankle Boot - Women Marian Ankle Boots online on YOOX United Kingdom - 11333010WN , Alberto Guardiani Sandals - Women Alberto Guardiani Sandals online on YOOX United Kingdom - 11426248TPMunro American Silver Gold Eclipse Sandals , LADY Christian Louboutin Yellow Platforms On-linej2GCDibA Carhartt 6" Waterproof Wedge Boot , Breathable shoes Sol Sana Tabbie Wedge , Upper material Lucky Brand Fausst , Ryka Aubonne Gear up for the cold with the Ryka Aubonne boots , Nike White Red Blue Black Hyper Venom Sneakers ,
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.