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.Mm6 Maison Margiela Sandals - Women Mm6 Maison Margiela Sandals online on YOOX United Kingdom - 11331230PWPITILLOS 3730 ZAPATO PLANO PARA MUJERNike Women's Juvenate Print Cool Grey Sneakers. Seamless and Ultra-comfortable Juvenate Features A No-tongue Design For Sneakers , Golden Goose Deluxe Brand Sneakers - Women Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11456103SVIBIZA BEACH 5846 Taupe FASHION SANDALS FOR WOMENLOVE MOCHINO Ja15074 LOW-TOP TRAINERS FOR WOMENmen's/women's Calvin Klein Fabrice Boots Different stylesmen's/women's RAYE Paige Flats Order welcome , Reebok Classic Trainers - carotene/whiteECCO Shape 75 Sleek Ankle Boot , Adidas RAID AMANDA - Cowboy/Biker boots - blackNike Sportswear OUTBURST - Trainers Colour: mica green/phantom/summit white/blackInov-8 TRAILTALON 290 - Trail running shoes Colour: black/bluemen's/women's Marc Fisher Idalee 2 Boots Fine wild , Men/Women Madden Girl Torch Boots a wide variety of goodsMen/Women Donald J Pliner Giraldo-5X Boots Quality and quantity guaranteedMen/Women PUMA Enzo NF Sneakers & Athletic PUMA Modern modeBikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 11450784SB , Cafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11009315UH , C'est Moi Court - Women C'est Moi Courts online on YOOX United Kingdom - 11467553OWVic Matiē Boots - Women Vic Matiē Boots online on YOOX United Kingdom - 11246623HMEbarrito Ballet Flats - Women Ebarrito Ballet Flats online on YOOX United Kingdom - 11552246RAMelissa Flip Flops - Women Melissa Flip Flops online on YOOX United Kingdom - 11353299ORJil Sander Loafers - Women Jil Sander Loafers online on YOOX United Kingdom - 11526873UP , Ladies Yoki Tan Sandals Authentic guaranteeElegant shape Stacy Adams MacmillianAriat Fenix The Spanish-inspired Ariat Fenix bootie boasts a sleek silhouette and excellent craftsmanship for a modern Western style. , JKn5tDKc LADY Black Stilettos Platforms FashionAthletic Propulsion Labs Blue Apl Propelium Sneakers Sneakers , Women's Prada White Platforms New products in 2352
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.