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.Francesco Milano Ankle Boot - Women Francesco Milano Ankle Boots online on YOOX United Kingdom - 11540402RF , Le Marinē Ankle Boot - Women Le Marinē Ankle Boots online on YOOX United Kingdom - 11486113XJ , Puma Tsugi-Mi Evoknit - Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11461607UPSalvador Ribes Sandals - Women Salvador Ribes Sandals online on YOOX United Kingdom - 11532391PA , Keds TRIPLE KICK METALLIC LINEN Pink / Gold , Il Borgo Firenze Ankle Boot - Women Il Borgo Firenze Ankle Boots online on YOOX United Kingdom - 11288613VN , Robert Clergerie Ankle Boot - Women Robert Clergerie Ankle Boots online on YOOX United Kingdom - 11257420BF , Women's Kurt Geiger London Tan Wedges Known for its excellent quality , womens Tory Burch 511486772 Wedges Price reduction , women Birkenstock Brown Florida Sandals Exquisite workmanship , Men/Women Calvin Klein Ganya Heels Great varietyLd runner lw trainers , black, Nike , men/women Geox WJALEAH4 Heels Medium cost , Kennel & Schmenger Pointed Flat Slide , Converse STAR PLAYER - Trainers - field surplus/egret , Vibram Fivefingers EL-X - Sports shoes - khaky/coyote , Montefiori Sneakers - Men Montefiori Sneakers online on YOOX United Kingdom - 11248668BB , Munich Sneakers - Men Munich Sneakers online on YOOX United Kingdom - 11446663IS , Ixos Court - Women Ixos Courts online on YOOX United Kingdom - 11384996DNJeffrey Campbell Court - Women Jeffrey Campbell Courts online on YOOX United Kingdom - 11467118BTGioseppo Flip Flops - Women Gioseppo Flip Flops online on YOOX United Kingdom - 11340779CQ , 1725.A Flip Flops - Women 1725.A Flip Flops online on YOOX United Kingdom - 11332619MTClarks Ankle Boot - Women Clarks Ankle Boots online on YOOX United Kingdom - 11441264DDwomens Nina Cream Formal Shoes Queensland , Born Ivy Reinvent your style with the edgy Ivy boot from Born , Ladies Marc Jacobs Black Jelly Sandals Every article described is availableNike Olive/Black/Cellery | Jacquard Print Roshe One - Women's Sneakers , Manolo Blahnik Lilac Hangisi 70 Purple Satin Jeweled Pumps , Cole Haan Gold Leather Heels (43910) Sandalswomens Rainbow Canvas Wedge Sandals Elegant style
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.