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.Sara López Ankle Boot - Women Sara López Ankle Boots online on YOOX United Kingdom - 11545920OC , Roberto Del Carlo Court - Women Roberto Del Carlo Courts online on YOOX United Kingdom - 11493943WESam Edelman Espadrilles - Women Sam Edelman Espadrilles online on YOOX United Kingdom - 11090351AW , Donna Soft Loafers - Women Donna Soft Loafers online on YOOX United Kingdom - 11486909EPLa Sportiva Trango Ice Cube GTX , Karl Lagerfeld Pyramide Mary Jane Glitter - Court - Women Karl Lagerfeld Courts online on YOOX United Kingdom - 11424004EB , SKECHERS 52938 ZAPATILLAS SLIP ON DE HOMBREChristian Louboutin Multicolor Bip Bip Orlato Pailettes Sneakers , Attilio Giusti Leombruni Pale Pink Bejeweled Sneaker SneakersDKNY Black barrow Fashion Sneaker Slip On Sneakers , WOMEN Vans Blac On Sneakers Excellent qualityPedro Miralles Classic heels Colour: forestaOnitsuka Tiger MEXICO 66 - Trainers Colour: dark sepia/port royalAdidas Carvela LAMAR - Trainers - pink , man/woman Hush Puppies Sidra Malia Heels Outstanding style , At.P.Co Loafers - Men At.P.Co Loafers online on YOOX United Kingdom - 11554049NLShuga Sneakers - Men Shuga Sneakers online on YOOX United Kingdom - 11235045LCD.A.T.E. Sneakers - Men D.A.T.E. Sneakers online on YOOX United Kingdom - 11253859QN , man/woman Emerica The Reynolds Cruiser LT Sneakers & Athletic Emerica Different styles , Karl Lagerfeld Sneakers - Men Karl Lagerfeld Sneakers online on YOOX United Kingdom - 11495969OQCharme Boots - Women Charme Boots online on YOOX United Kingdom - 11454899XPWoolline Ballet Flats - Women Woolline Ballet Flats online on YOOX United Kingdom - 11537218ETElisa Mey® Sandals - Women Elisa Mey® Sandals online on YOOX United Kingdom - 11374908LO , adidas Samba Sneaker In White Sneakers , Perfect processing ED Ellen DeGeneres Naleena , Human border Easy Spirit AileneBlowfish Rammish For a trendy fall look throw on the Rammish boots by Blowfish! , Mephisto Zach Look no further than the ‘Zach' slide sandal for well crafted comfortwoman Chloé Two Tone Teak/Apricot Sandals Quality and quantity guaranteed , Nike Women's Orange Juvenate Sneakers Style/Color: 724979-604 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.