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.L' Autre Chose Court - Women L' Autre Chose Courts online on YOOX United Kingdom - 11226419FHDaniele Ancarani Court - Women Daniele Ancarani Courts online on YOOX United Kingdom - 11524205NJOTAZUA 52351 LOW-TOP TRAINERS FOR WOMEN , lady Brown/Multi Brown/Peacock Painted Canvas Wedges Every article described is availableWOMEN Stuart Weitzman Nude Rl97874 Platforms Carefully selected materials , ladies Christian Louboutin Black Sling Platforms Easy to handle , Boxfresh ACEUS - Trainers - blackConverse ONE STAR - Trainers Colour: blackmens/womens Born Madyson Boots Reliable reputation , Dr. Martens Horton 6-Eye Chukka Boot , Columbia North Plains II Waterproof Mid , El Naturalista STELLA - Ankle strap ballet pumpsAdidas Sneakers - Men Adidas Sneakers online on YOOX United Kingdom - 11428308GQBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11450770IK , Men/Women New Balance Classics ML597 Sneakers & Athletic New Balance Classics luxurious , Paco Gil ADELE CHEF - Classic ankle boots Colour: black /fuchsia galaxy , Adidas Calvin Klein Jeans ELEHANNA - Classic heels - blackGeneve Espadrilles - Women Geneve Espadrilles online on YOOX United Kingdom - 11153356OP , 1,618 Sandals - Women 1,618 Sandals online on YOOX United Kingdom - 11537337EULove Moschino Sneakers - Women Love Moschino Sneakers online on YOOX United Kingdom - 11172169TI , Leonardo Principi Loafers - Women Leonardo Principi Loafers online on YOOX United Kingdom - 11221979UFAlaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11463634GPMaison Margiela Sneakers - Women Maison Margiela Sneakers online on YOOX United Kingdom - 11498363SNuT5zg3yP Sanuk Yoga Sling Cruz SignaturefM0XvWDS Kenneth Cole Reaction Travis Monk , D407R5GB DANSI 8502 MULES PARA MUJER , Moderate price Dr. Martens 2976 Vonda , Brand feast Robert Talbott SausalitoLadies Lilly Pulitzer Green Cute Sandals Diverse new design , Naot Light Silver Leather and Cork Sandals ,
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.