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.Tipe E Tacchi Sandals - Women Tipe E Tacchi Sandals online on YOOX United Kingdom - 11333000CW , Dolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11522181NRJoe Nephis Court - Women Joe Nephis Courts online on YOOX United Kingdom - 11489142MI , Rose's Roses Sandals - Women Rose's Roses Sandals online on YOOX United Kingdom - 11496688VB , Loretta Pettinari Sneakers - Women Loretta Pettinari Sneakers online on YOOX United Kingdom - 11476928KT , a5VaF6C5 men's/women's Naot Marsanne Heels SimpleDibrera By Paolo Zanoli Ankle Boot - Women Dibrera By Paolo Zanoli Ankle Boots online on YOOX United Kingdom - 11447001KQ , LOLAS S032300325mpi FASHION ANKLE BOOTS FOR WOMEN , Women's Stuart Weitzman Diplille Platforms Elegant appearancemen's/women's Pelle Moda Darna Boots Primary quality , men's/women's LifeStride Transcend Heels Cheap orderGeox ANNYTAH - Slip-ons Colour: black , men/women Esprit NITA - Trainers Superb craftsmanship , mens/womens Minelli High heeled sandals Bright colorsNew Look Wide Fit YUMMY WIDE FIT - High heels Colour: camelGeneve Loafers - Women Geneve Loafers online on YOOX United Kingdom - 11486136GQVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11574025PADsquared2 Ankle Boot - Women Dsquared2 Ankle Boots online on YOOX United Kingdom - 11481240JKCedric Charlier Sneakers - Women Cedric Charlier Sneakers online on YOOX United Kingdom - 11547864NXAlberto Guardiani Loafers - Women Alberto Guardiani Loafers online on YOOX United Kingdom - 11560871XEMaison Margiela Sneakers - Women Maison Margiela Sneakers online on YOOX United Kingdom - 11255368ADEric Javits Purple Quilted Suede SandalsMISS Brown Snakeskin Heels Sandals RepairO00bzauN Cole Haan Kinslee Pump 85mm , Giesswein Laura You're sure to adore this tasteful slipper by GiessweinLaurence Dacade Blac Studded Leather T-strap Heels SandalsTory Burch Brown T T-strap Heels Sandals , Free People Pink & Gold "Harper" Sandals , Sergio Rossi Brown Pelle Mesh Panel SandalsWomen's Studio Pollini Multicolor Summer Platforms newcomer
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.