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.Catarina Martins Ankle Boot - Women Catarina Martins Ankle Boots online on YOOX United Kingdom - 11507004SPMiu Miu Ankle Boot - Women Miu Miu Ankle Boots online on YOOX United Kingdom - 11263270MD , Jeffrey Campbell Sandals - Women Jeffrey Campbell Sandals online on YOOX United Kingdom - 11258854OE , ADIDAS B-75692 LOW-TOP TRAINERS FOR WOMENMarc By Marc Jacobs Sneakers - Women Marc By Marc Jacobs Sneakers online on YOOX United Kingdom - 11116925CDWOMENS Sam Edelman Black Camilla Wedges We have received praise from our customers.womens Ralph Lauren Grey Sandals a wide range of products , Nike Green and Yellow Women's The Roshe Ld-1000's SneakersGO SEXY S048830001mse LOW-TOP TRAINERS FOR WOMEN , YEEZY White Boost 350 V2 Triple Sneakers , men's/women's Franco Sarto Pinot Heels Innovative designman/woman Geox WSANDALVEGA3 Sandals Excellent craft , SKECHERS Bright Idea - On Edge , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11569561UI , Doucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11391659CXBottega Marchigiana Sneakers - Men Bottega Marchigiana Sneakers online on YOOX United Kingdom - 11183197CMVersace Court - Women Versace Courts online on YOOX United Kingdom - 11563334TQ , Manas Boots - Women Manas Boots online on YOOX United Kingdom - 11512985IA , Alaïa Sandals - Women Alaïa Sandals online on YOOX United Kingdom - 11398541VKPaul Andrew Sandals - Women Paul Andrew Sandals online on YOOX United Kingdom - 11263572RFAlberto Fermani Sneakers - Women Alberto Fermani Sneakers online on YOOX United Kingdom - 11560534JTPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11562589OO , Fratelli Rossetti Sandals - Women Fratelli Rossetti Sandals online on YOOX United Kingdom - 11338865GCKork-Ease Neutral Colorblock Wedge Fay SandalsRdUA3rk0 Hush Puppies Abney Chrissie Lo , 8E7Z3IsL Nike SB Check Solar PremiumGood world reputation Reef Iris LE , Settlement Price Blondo Alida Waterproof , Dansko Justin Not just another dress shoe, the Justin brings style and comfort that's perfect for those long workdays , Nike White 579619-103 104619297 Upc 00887229854849 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.