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.Chiara Ferragni Open-Toe Mules - Women Chiara Ferragni Open-Toe Mules online on YOOX United Kingdom - 11492912HE , Holly Queen Ankle Boot - Women Holly Queen Ankle Boots online on YOOX United Kingdom - 11548456RDGiuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11544619VELes Étoiles Lucques Sandals - Women Les Étoiles Lucques Sandals online on YOOX United Kingdom - 11481105MW , Atos Lombardini Ankle Boot - Women Atos Lombardini Ankle Boots online on YOOX United Kingdom - 11221527PDConverse All Star Ct As Sp - Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11551590OFNila & Nila Ankle Boot - Women Nila & Nila Ankle Boots online on YOOX United Kingdom - 11478898AVWOMEN Eric Michael Tan Vera Wedges New varieties are introducedCARMELA 66584 FASHION ANKLE BOOTS FOR WOMEN , men's/women's Dolce Vita Mollie Boots Beautiful appearance , man/woman XOXO Satisha Heels Official website , Puma CLASSIC BUBBLE - TrainersAdidas New Balance ML840 - Trainers - grovemen's/women's Rockport Sharp & Ready Channer Oxfords buyPiola PUNTA HERMOSA - Trainers - white/orangeSpringa Sneakers - Men Springa Sneakers online on YOOX United Kingdom - 11469971KT , Jack Wolfskin MTN ATTACK 6 TEXAPORE - Walking shoes Colour: burly yellowMen/Women Merrell World Vue Oxford Oxfords Adequate supply and timely deliveryMen/Women KENDALL + KYLIE Bridget 2 Boots Sales online store , Albano Sandals - Women Albano Sandals online on YOOX United Kingdom - 11415930MWGeox Court - Women Geox Courts online on YOOX United Kingdom - 11539536FKGianmarco Lorenzi Court - Women Gianmarco Lorenzi Courts online on YOOX United Kingdom - 11488579QOThe Seller Boots - Women The Seller Boots online on YOOX United Kingdom - 11545544WMNero Giardini Sneakers - Men Nero Giardini Sneakers online on YOOX United Kingdom - 11499992IR , oFpTF7Ce SKECHERS 12293-bbk TRAINERS FOR WOMEN , Attractive fashion Vans SK8-Hi Platform 2.0Direct business Sam Edelman Morris , Steven Saina Liven up your everyday look with the trend-right Steve Madden Saina Sandal!womens Miu Miu Black Heel Platforms We have received praise from our customers. , women Valentino Black Rockstud Flatform Sandals Win highly appreciated
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.