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.Twin-Set Simona Barbieri Sneakers - Women Twin-Set Simona Barbieri Sneakers online on YOOX United Kingdom - 11322504CP , Andrea Morando Ankle Boot - Women Andrea Morando Ankle Boots online on YOOX United Kingdom - 11531475NN , Nike Air Vapormax Plus - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11490053UUJanet Sport Boots - Women Janet Sport Boots online on YOOX United Kingdom - 11252680XTNew Balance 580 Suede - Mesh 90'S Running - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11195432LB , Loretta By Loretta Ankle Boot - Women Loretta By Loretta Ankle Boots online on YOOX United Kingdom - 11506146QD , Tory Burch Platinum Marion New In Box Quilted Metallic Leather Sneakers Sneakerswoman Steve Madden Black Stokker Platforms Selected materialsmens/womens Patricia Green Bianca Sandals Many varieties , New Look SHEPHERD - SandalsMen/Women Chinese Laundry Cali Clogs & Mules Complete specifications , Adidas River Island High heeled sandals - greenColumbia PEAKFREAK XCRSN II OUTDRY - Walking shoes , man/woman Adidas Men's Pureboost Shoes Schuhe Bright colorsmen's/women's Eileen Fisher Reese Boots Vintage tide shoesmens/womens Tahari Jay Sandals Highly praised and appreciated by the consumer audienceAdidas Head over Heels by Dune TAYTE - Boots - greyClarks BATCOMBE TOP - Classic ankle boots - dark tanAdidas Nike Performance METCON 4 - Sports shoes - particle beige/celestial teal/light silver/smokey mauveMen/Women Hush Puppies Hanston Roadside Sneakers & Athletic Hush Puppies Elegant and sturdy packagingCantarelli Sandals - Women Cantarelli Sandals online on YOOX United Kingdom - 11373637TL , A.Testoni Boots - Women A.Testoni Boots online on YOOX United Kingdom - 11548597JJ , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11547912HCBelstaff Boots - Women Belstaff Boots online on YOOX United Kingdom - 11542442FG , Schutz Court - Women Schutz Courts online on YOOX United Kingdom - 11410566LJSax Ankle Boot - Women Sax Ankle Boots online on YOOX United Kingdom - 11073594DBRich design Sam Edelman Felicia , Earth Zeal Hit the town in the on-trend hi-top Zeal sneaker from Earth , Harley-Davidson Gilmour The Harley-Davidson Gilmour boot offers long-lasting style, reliable durability, and supportive comfort, making it ideal for all-day wear. , Ladies Donald J. Pliner Multicolor Sandals Beautiful design
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.