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.Converse All Star Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11573262XX , Maison Margiela Ankle Boot - Women Maison Margiela Ankle Boots online on YOOX United Kingdom - 11234044SF , Spingle Move W Sneakers - Men Spingle Move W Sneakers online on YOOX United Kingdom - 11308117BHMinnetonka Fringed Moc - Loafers - Women Minnetonka Loafers online on YOOX United Kingdom - 11227589LP , Polo Ralph Lauren Vaughn Slip-On II , CALLAGHAN 16100.3 CASUAL SHOES FOR MANKICKERS 512381-50 Seeboots 18 Bordeaux FASHION FOOTWEAR FOR WOMENIsabel Marant Olive Green Bekett Suede Wedge (8) SneakersCrocs Swiftwater Kryptek Neptune Deck FlipUa sk8-hi platform 2.0 platform trainers , black, Vans , men's/women's Nanette nanette lepore Valentina Sandals Beautiful designNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11359571RS , men/women English Laundry Vane Sneakers & Athletic English Laundry Very good color , men's/women's adidas Nemeziz Tango 17.4 Turf Sneakers & Athletic adidas Fine processingman/woman Dr. Scholl's Windup Sneakers & Athletic Dr. Scholl's Reliable performanceAdidas Chie Mihara DELUXE - High heels - multi grape/granate/castano/grapeU.S.Polo Assn. Sneakers - Men U.S.Polo Assn. Sneakers online on YOOX United Kingdom - 11345446KU , Marc Jacobs Sneakers - Men Marc Jacobs Sneakers online on YOOX United Kingdom - 44933167DSman/woman PUMA Clyde Mid Core Foil Sneakers & Athletic PUMA Vintage tide shoesGiamba Sandals - Women Giamba Sandals online on YOOX United Kingdom - 11088965LD , Ancarani Sandals - Women Ancarani Sandals online on YOOX United Kingdom - 11332140BQ , Rodolphe Menudier Court - Women Rodolphe Menudier Courts online on YOOX United Kingdom - 11515679QTf8IyCScj STROVER 3544-2 SHOES FOR WOMENTory Burch Black Gold Patent Leather Reva Logo Floral SandalsLADY Air Jordan 13 Retro Sneakers Online export business , Women's Brian Atwood Ivory Metallic Platforms Average costswoman Burberry Bridle Housecheck City Sneakers Professional design , woman Zara Navy Blue (2668) Sandals Special functionDolce&Gabbana Pink & Gold Leather Princess Sandals , Women's Donald J. Pliner Beige Platforms Queensland ,
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.