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.Settantatre Lr Ankle Boot - Women Settantatre Lr Ankle Boots online on YOOX United Kingdom - 11515391WDAgile By Rucoline Sneakers - Women Agile By Rucoline Sneakers online on YOOX United Kingdom - 11496713RQ , Stele Ankle Boot - Women Stele Ankle Boots online on YOOX United Kingdom - 11469243GTDUNLOP 35328 26 Negro LOW-TOP TRAINERS , Stuart Weitzman Black The 45squarenudist SandalsDibrera By Paolo Zanoli Sneakers - Women Dibrera By Paolo Zanoli Sneakers online on YOOX United Kingdom - 11568566QB , Bruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11355674XXwomens Tory Burch Moore Flat Sandals Cheapest , womens Prada Pink Bow Sandals Order welcomeWomen's Tory Burch Brown/Black Sandals Special Price , man/woman bernie mev. Harriet Flats Aesthetic appearance , New Look CARE - Boots Colour: tan , Etnies FADER 2 - Skate shoes , H by Hudson BRECHIN - Classic ankle boots Colour: blackCassis c?te d'azur BOIKEN - Ankle cuff sandalsmen's/women's Hunter Boots Colour: black Complete specification , man/woman AND1 Downtown Sneakers & Athletic AND1 Elegant and sturdy set meal , men/women G.H. Bass & Co. Dixon Boots Suitable for color , Fabiano Ricci Sneakers - Men Fabiano Ricci Sneakers online on YOOX United Kingdom - 11546979PQ , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11551155SM , Khrio' Loafers - Women Khrio' Loafers online on YOOX United Kingdom - 11477424MOTod's Sandals - Women Tod's Sandals online on YOOX United Kingdom - 11397796OTFabrizio Chini Sneakers - Women Fabrizio Chini Sneakers online on YOOX United Kingdom - 11510565JJPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11488293QE , Giuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11512704OG , Patrizia Pepe Sneakers - Women Patrizia Pepe Sneakers online on YOOX United Kingdom - 11551821PO , Camper Ankle Boot - Women Camper Ankle Boots online on YOOX United Kingdom - 11356983FP , Elegant and sturdy set meal Eastland 1955 Edition Astorladies Jimmy Choo Black Diva Platforms Sale Italy , LADY Balenciaga Black Thorn Strap Sandals Strong value
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.