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.Bruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11455755PB , Emporio Armani Ankle Boot - Women Emporio Armani Ankle Boots online on YOOX United Kingdom - 11579340XTSuecomma Bonnie Ankle Boot - Women Suecomma Bonnie Ankle Boots online on YOOX United Kingdom - 11453061IPVic Matiē Court - Women Vic Matiē Courts online on YOOX United Kingdom - 11521453QDLe Stelle Court - Women Le Stelle Courts online on YOOX United Kingdom - 11450808HBMTNG 54900 Ante W.12 Dark Jeans BOTíN PLANO DE MUJERwomen Missoni Multi Color Cork Pumps Carefully selected materials , LOIS 85616 200 Oro LOW-TOP TRAINERS FOR WOMENCAPRICE 25409 FASHION ANKLE BOOTS FOR WOMEN , Arena TEAM STRIPE SLIDE - Pool sliders , Star player ox trainers , off-white, ConverseTommy Jeans CITY - Trainers Colour: blackTommy Hilfiger OXLEY - WelliesALDO SHELFER - Slip-ons Colour: cognacColumbia TERREBONNE II OUTDRY - Hiking shoes - black/steamMen/Women Lugz Drifter Lo Ballistic Boots renewed on time , Lacoste EVARA - Trainers - brown/dark redHASSIA WIDE FIT BARCELONA - Trainers Colour: ocean , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11490787EE , men's/women's New Balance WW1865v1 Sneakers & Athletic New Balance Direct businessmens/womens Calvin Klein Nayland Sneakers & Athletic Calvin Klein retail price , Nike Performance PHANTOM 3 ACADEMY FG - Moulded stud football boots - black/light crimson , Image Court - Women Image Courts online on YOOX United Kingdom - 11525482VCRed(V) Boots - Women Red(V) Boots online on YOOX United Kingdom - 11289069HH , Valleverde Loafers - Women Valleverde Loafers online on YOOX United Kingdom - 11547469QLGiorgio Armani Loafers - Women Giorgio Armani Loafers online on YOOX United Kingdom - 11563237UJ , Marco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11228898TQStuart Weitzman Black Sparta Gladiator Sandals , uoUvp9kS OTAZUA 6045 SHOES FOR WOMEN , Liu •Jo Shoes Court - Women Liu •Jo Shoes Courts online on YOOX United Kingdom - 11225038KU
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.