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.Anaid Kupuri Ankle Boot - Women Anaid Kupuri Ankle Boots online on YOOX United Kingdom - 11546137HU , Jeffrey Campbell Open-Toe Mules - Women Jeffrey Campbell Open-Toe Mules online on YOOX United Kingdom - 11548226SI , Schutz Flip Flops - Women Schutz Flip Flops online on YOOX United Kingdom - 11524338GS , Steve Madden Sneakers - Women Steve Madden Sneakers online on YOOX United Kingdom - 11428175KPWomen's Tahari White/Black Sandals Special Price , Croft & Barrow Sale-sale-sale-black and Pewter Cb Quinn SandalsTory Burch Light Tan Miller Wedge SandalsMen/Women Jack Rogers Sadie Boots cheap price , man/woman Diane von Furstenberg Leiden-3 Loafers Cost-effectivemen's/women's Pier One Platform heels Elegant shapeKarhu Sneakers - Men Karhu Sneakers online on YOOX United Kingdom - 11498051LHReebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11551826VM , Carshoe Boots - Men Carshoe Boots online on YOOX United Kingdom - 11442406PR , Guidi Boots - Men Guidi Boots online on YOOX United Kingdom - 11489158NVReebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11485005NUmen/women Walking Cradles Hemingway Boots A balance between toughness and hardnessASOS DESIGN | ASOS DESIGN Wide Fit Phizzle Mesh High Heels , Adidas Dune London MOIRA - High heeled sandals - blue , O.X.S. Boots - Women O.X.S. Boots online on YOOX United Kingdom - 11314607WMHogan Court - Women Hogan Courts online on YOOX United Kingdom - 11023946XQ , Khrio' Ankle Boot - Women Khrio' Ankle Boots online on YOOX United Kingdom - 11475339RS , Salvatore Ferragamo Court - Women Salvatore Ferragamo Courts online on YOOX United Kingdom - 11528788FE , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11469214CN , Loretta Pettinari Sandals - Women Loretta Pettinari Sandals online on YOOX United Kingdom - 11386414IJ , Easy to clean surface Ariat Bit Cruiser , MISS Valentino Black Rockstuds Pumps King of the quantityTory Burch Pettee Sneakers Suede Silk Cabernet SneakersChristian Louboutin Night Navy Decollette Patent 70 Pumps , Ladies Valentino Beige/P45 Jelly Rockstud Sandals Reliable reputationLADY Birkenstock White Kairo Sandals Rich design
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.