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.Donna Modello Ankle Boot - Women Donna Modello Ankle Boots online on YOOX United Kingdom - 11529416UE , Alexander Wang Ankle Boot - Women Alexander Wang Ankle Boots online on YOOX United Kingdom - 11460340XA , What For Sandals - Women What For Sandals online on YOOX United Kingdom - 11420067OS , Blu Byblos Sandals - Women Blu Byblos Sandals online on YOOX United Kingdom - 11417221QG , Basket Bling Women’s Sneakers | Puma White-Metallic GoldNicole Bonnet Paris Ankle Boot - Women Nicole Bonnet Paris Ankle Boots online on YOOX United Kingdom - 11467416GVAgl Attilio Giusti Leombruni Loafers - Women Agl Attilio Giusti Leombruni Loafers online on YOOX United Kingdom - 11539956CM , KICKERS 470960-50 Kh?ol 9 Marron FASHION SANDALS FOR WOMENDUNLOP 35318 155 Rosa LOW-TOP TRAINERS FOR WOMEN , woman FitFlop Lipstick Rose Sandals Very good color , Manolo Blahnik Light Blue/Green Strappy Stilettos Sandals , men/women Comfortiva Amesbury Boots renewed on timemen/women Born Havana Heels Pleasant appearanceCole Haan Jagger Grand Weave Oxford , man/woman Sperry Cape Stars and Stripes Loafers special promotionmen's/women's Ted Baker Baise 2 Boots Used in durability , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11467647UE , Men/Women PUMA Basket Platform Metallic Sneakers & Athletic PUMA Vintage tide shoes , Adidas Lauren Ralph Lauren RAILROAD STRIPE JOLIE - Trainers - blue , men/women Blue by Betsey Johnson Siera Clogs & Mules best sellerWide fit black studded ballet pumps, sizes 38-45 , black, CastalunaQuiksilver VERANT MID DELU SHOE - High-top trainers - greyMen/Women G.H. Bass & Co. Nolan Oxfords Diverse new design , Manebí Espadrilles - Women Manebí Espadrilles online on YOOX United Kingdom - 11100282NI , Suecomma Bonnie Sneakers - Women Suecomma Bonnie Sneakers online on YOOX United Kingdom - 11452999AV , Vicini Tapeet Loafers - Women Vicini Tapeet Loafers online on YOOX United Kingdom - 11311898BE , At an affordable price Merrell Around Town BackstrapBernardo Hazel Have your look sweet and stylish in the Bernardo HazelVaneli Pomona Give your evening ensemble a chic upgrade with the Vaneli Pomona pump , Prada Black Men's Leather High Top Sneakers 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.