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.Tua By Braccialini Boots - Women Tua By Braccialini Boots online on YOOX United Kingdom - 11449304HA , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11174041RS , Irish Setter Crosby 8" Waterproof HikerPLUMERS 9149 FASHION BOOTS FOR WOMEN , Birkenstock YARA Two / Tone / Cream / Pink , Jolie By Edward Spiers Ballet Flats - Women Jolie By Edward Spiers Ballet Flats online on YOOX United Kingdom - 11540051PQ , La Fee Maraboutee Ankle Boot - Women La Fee Maraboutee Ankle Boots online on YOOX United Kingdom - 11488734FC , woman Christian Louboutin Nude Victoria Platforms Order welcomeLADY Sasha Fabiani Tan Italian Sandals quality QueenAdidas Caprice High heels - oceanmtng TACANA - Platform bootsAdidas Tkees DUOS - T-bar sandals - oyster shell , Vans OLD SKOOL ZIP - Trainers Colour: black/true white , Rockport Cobb Hill Collection Cobb Hill Judson Cross PumpSelected Homme | Selected Homme Grain Leather Shoe , Aquazzura Boots - Women Aquazzura Boots online on YOOX United Kingdom - 11232105AQ , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11510899BAMen/Women New Balance 996v3 Sneakers & Athletic New Balance Stylish and charmingman/woman adidas Stella McCartney Barricade 2015 Sneakers & Athletic adidas First batch of customersD.A.T.E. Sneakers - Women D.A.T.E. Sneakers online on YOOX United Kingdom - 11529673SISantoni Boots - Women Santoni Boots online on YOOX United Kingdom - 11539135WI , Opening Ceremony Sandals - Women Opening Ceremony Sandals online on YOOX United Kingdom - 11448737STTory Burch Espadrilles - Women Tory Burch Espadrilles online on YOOX United Kingdom - 11577700QKPantofola D'oro Sneakers - Women Pantofola D'oro Sneakers online on YOOX United Kingdom - 11569586VJ , Modern and elegant fashion CLARKS Tri Pearl , Highly praised and appreciated by the consumer audience Shellys London Heather , BCBGMAXAZRIA Black Silver Rhinestones Sale Signature Bcbg Stunning Last Pair Available Sandals , Opening Ceremony Red Slip-on Platform Sneakers Sneakers , Tory Burch Navy/Black Nola High Top Sneakers , lady Via Spiga Sand Sandals Reliable quality ,
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.