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.Isabel Marant Ankle Boot - Women Isabel Marant Ankle Boots online on YOOX United Kingdom - 11248756GE , ?ù Ankle Boot - Women ?ù Ankle Boots online on YOOX United Kingdom - 11275614UU , Gaimo Ankle Boot - Women Gaimo Ankle Boots online on YOOX United Kingdom - 11517137WH , WOMEN Christian Louboutin Pistachio Sandals RepairNike Performance PHANTOM OBRAX 3 ACADEMY DF IC - Indoor football boots Colour: wolf grey/metallic dark grey/dark grey/light crimson/pure platinumColiac Martina Grasselli Loafers - Women Coliac Martina Grasselli Loafers online on YOOX United Kingdom - 11469938WTwomen FitFlop Black Rumba Toe Sandals Rich on-time delivery , PONS QUINTANA 7158 ZAPATO PLANO PARA MUJER , EXE Jessica-688 ZAPATO DE SALóN PARA MUJER , men/women LAUREN Ralph Lauren Hasel Heels Maintenance capabilitymen/women Stuart Weitzman Linedrive Sandals Economical and practical , Adidas Weekend Platform heels - prestige marinoBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11553846GD , 2Star Sneakers - Men 2Star Sneakers online on YOOX United Kingdom - 11331059QQ , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11450985OB , Santoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11541307UO , Doucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11508879EPErmenegildo Zegna Loafers - Men Ermenegildo Zegna Loafers online on YOOX United Kingdom - 11555107LQTiffi Sandals - Women Tiffi Sandals online on YOOX United Kingdom - 11424821QESchutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11391712UO , Garrice Ankle Boot - Women Garrice Ankle Boots online on YOOX United Kingdom - 11300970GOBlackstone Ankle Boot - Women Blackstone Ankle Boots online on YOOX United Kingdom - 11581814TXLe Chameau Boots - Women Le Chameau Boots online on YOOX United Kingdom - 11159744MXBernie Mev. Sneakers - Women Bernie Mev. Sneakers online on YOOX United Kingdom - 11564462QO , WOMEN Reed Evins Formal Shoes uppersFirst grade in its class Clarks Un Roam Step , General product Speedo On Deck FlipWOMEN Nine West Black Leather Wedges Good designLadies Cole Haan Nikr Air Platforms superior , Balenciaga Multi Color Race Runner 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.