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.Cesare Paciotti 4Us Sneakers - Women Cesare Paciotti 4Us Sneakers online on YOOX United Kingdom - 11388628CTGet It Ankle Boot - Women Get It Ankle Boots online on YOOX United Kingdom - 11337465BV , L' Autre Chose Ankle Boot - Women L' Autre Chose Ankle Boots online on YOOX United Kingdom - 11247564PT , Vans Ua Authentic Fringe Snow White - Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11559763QTC.DOUX 7817 R FASHION SANDALS FOR WOMENEXE Vicky-310 FASHION ANKLE BOOTS FOR WOMEN , WOMEN Gianni Bini Heels Platforms Famous storeMen/Women Nine West Orsella Boots Good qualitymen/women Frye Gabby Ghillie Stud Boots main category , Versus leather ankle boots , black, Kaporal 5Rochas Court - Women Rochas Courts online on YOOX United Kingdom - 11467260LOLerre Court - Women Lerre Courts online on YOOX United Kingdom - 11518426CPSantoni Sneakers - Women Santoni Sneakers online on YOOX United Kingdom - 11478258WK , Exibit Boots - Men Exibit Boots online on YOOX United Kingdom - 11464925RSO.X.S. Boots - Men O.X.S. Boots online on YOOX United Kingdom - 11471844VNAdidas Les Tropéziennes par M Belarbi MERINGUE - Ankle boots - noir , Sneeky Sneaker Sneakers - Men Sneeky Sneaker Sneakers online on YOOX United Kingdom - 11507326GHMoschino Court - Women Moschino Courts online on YOOX United Kingdom - 11280417HH , 2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11339267GFSuperga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11081501NR , Steve Madden Boots - Women Steve Madden Boots online on YOOX United Kingdom - 11461360BB , Daniele Alessandrini Loafers - Men Daniele Alessandrini Loafers online on YOOX United Kingdom - 11489230VH , 1FUTj6wY Lacoste Carnaby Evo 318 6Yj7ZoLBn PUMA Tazon 6 Fracture FM , E1tqBsMs Under Armour UA Strive 7 , MHEOxLKD SKECHERS 12407 TRAINERS FOR WOMENFirst batch of customers Chinese Laundry Sammy SlideMany styles Toni Pons Tona , Diverse new design Bostonian Maxton Wingwomen Tory Burch Beige 167114 Wedges German Outlets
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.