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.Walk By Melluso Boots - Women Walk By Melluso Boots online on YOOX United Kingdom - 11532307PRStuart Weitzman Ankle Boot - Women Stuart Weitzman Ankle Boots online on YOOX United Kingdom - 11460774FW , Diadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11328300CH , Wolverine Marauder Multishox® Waterproof Steel Toe , EZZIO M395212-ezzio FASHION FOOTWEAR FOR WOMEN , womens Bandolino Brown Wedges Attractive fashion , B7MXY0mQ man/woman Aquatalia Giada Boots SimpleSuede Classic Women's Sneakers | Allure-Puma White | PUMA Lows | PUMA United States , Just Cavalli Ankle Boot - Women Just Cavalli Ankle Boots online on YOOX United Kingdom - 11055277RL , lady Prada Brown Suede Wedges Elegant style , woman Light Rose Platforms Not so expensive , women Nike Wine Dunk High Sneakers AffordableMen/Women Esprit Erika-Perf Sneakers & Athletic Esprit Complete specificationsSteve Madden DRAVEN - Classic ankle boots Colour: taupe , men's/women's Kenneth Cole Reaction Great Date Sandals renewed on time , Urban Sun Sneakers - Men Urban Sun Sneakers online on YOOX United Kingdom - 11549042VR , Nike Performance MERCURIAL VAPOR 12 ELITE - Moulded stud football boots - amarillo/white/dynamic yellow/black , men/women Deer Stags Johnson Sneakers & Athletic Deer Stags High quality and cheap , Lemaré Sneakers - Women Lemaré Sneakers online on YOOX United Kingdom - 11456156VV , Ebarrito Sneakers - Women Ebarrito Sneakers online on YOOX United Kingdom - 11458896QO , Anteprima Sandals - Women Anteprima Sandals online on YOOX United Kingdom - 11471256TN , Ldir Sneakers - Women Ldir Sneakers online on YOOX United Kingdom - 11321998CTGusto Boots - Women Gusto Boots online on YOOX United Kingdom - 11520397OR , Guido Sgariglia Court - Women Guido Sgariglia Courts online on YOOX United Kingdom - 11550417FNManas Ankle Boot - Women Manas Ankle Boots online on YOOX United Kingdom - 11513007TNMoma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11508468LKC7x2CW5u Finn Comfort Garmisch - 3911 , 5im1KqRc SKECHERS S012100111btx ZAPATILLA CON PLATAFORMA , Sam Edelman Sand Alexander Studded Sneakers Sneakers , LADY Tory Burch Bkack 90008620 Sandals Excellent
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.