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.Windsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11267662UV , C'n'c' Costume National Sandals - Women C'n'c' Costume National Sandals online on YOOX United Kingdom - 44698827VGTipe E Tacchi Sandals - Women Tipe E Tacchi Sandals online on YOOX United Kingdom - 11448171NSDolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11217889VLFLEXIMAX 132 ZAPATO CONFORT DE MUJER , Dibrera By Paolo Zanoli Boots - Women Dibrera By Paolo Zanoli Boots online on YOOX United Kingdom - 11446941CG , Vaneli Silver Metallic Leather Buckled Modesta 8) 8070 SandalsLADY Anne Klein Pewter Leather Sandals Nice appearance , men's/women's PARFOIS Espadrilles Colour: khaki useMen/Women Stuart Weitzman Smashing Boots Long-term reputationLacoste AVANCE - Trainers - navy/whiteMen/Women Frye Margaret Braid Shootie Boots buy online , Aigle Boots - Men Aigle Boots online on YOOX United Kingdom - 11475243HOLost Ink Wide Fit BLOCK BARELY THERE - High heeled sandals Colour: blackman/woman PUMA Enzo Premium Mesh Sneakers & Athletic PUMA high quality product , Nike Sportswear PRESTO FLY SE - Trainers - gym red/whiteNew Look Wide Fit WIDE FIT RACHEL - High heelsHogan Rebel Sneakers - Men Hogan Rebel Sneakers online on YOOX United Kingdom - 11257283DJ , Alberto Guardiani Sneakers - Men Alberto Guardiani Sneakers online on YOOX United Kingdom - 11370104JISantoni Sandals - Women Santoni Sandals online on YOOX United Kingdom - 11472525RD , Lanvin Court - Women Lanvin Courts online on YOOX United Kingdom - 11544510KQEbarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11459026AAGino Sentell® Boots - Women Gino Sentell® Boots online on YOOX United Kingdom - 11503825CP , Elisa Mey® Sandals - Women Elisa Mey® Sandals online on YOOX United Kingdom - 11558794CINike Black/Red Gold Embellished Airmax SneakersLADY Céline Black/Tan Wedges to buywomens SCHUTZ Beige Brasiliana Platforms tenderWomen's Dior Christian Formal Shoes Highly praised and appreciated by the audience of consumersLADY Saint Laurent Candy Glitter Platforms Make full use of materialsSaint Laurent Gray Men Hi Top Sneaker Sneakers ,
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.