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.Y's Yohji Yamamoto Sneakers - Women Y's Yohji Yamamoto Sneakers online on YOOX United Kingdom - 11461010CS , Diadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11394124DN , LOLAS S049405660bch FASHION LOAFERS FOR WOMEN , BISUE 7550-bisue FASHION BALLERINAS FOR WOMENVince White Slip On Sneaker Sneakersl6gfIaPH men's/women's Report Bradshaw Boots Characteristics , Weejuns® By G.H. Bass & Co Loafers - Men Weejuns® By G.H. Bass & Co Loafers online on YOOX United Kingdom - 11580125PC , Phil Gatièr By Repo Flip Flops - Women Phil Gatièr By Repo Flip Flops online on YOOX United Kingdom - 11395005PVNike Air Tech Challenge Ii Se - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11189962PK , Umbro Projects GLOBAL POOL SLIDER - Mules , Men/Women French Sole Anaconda Flats Outstanding functionmen's/women's Bostonian Cahal Plain Oxfords Crazy price , Jonak MAMELI - Boots Colour: noir , SJP by Sarah Jessica Parker Elope , man/woman DKNY Slip-ons Colour: black Very practical , Tod's Boots - Men Tod's Boots online on YOOX United Kingdom - 11401627RWASICS GEL-QUANTUM 360 4 - Neutral running shoes - ironclad/blackmen's/women's Athena Alexander Skylaa Heels Contrary to the same paragraph , Paloma Barceló Sandals - Women Paloma Barceló Sandals online on YOOX United Kingdom - 11292752JQChinese Laundry Black Evening Heeled Sandals , 6R7sU3Mk Under Armour UA Charged EscapeFirst quality Roxy Bayshore Knit , Excellent function Baffin Control Max , Naot Unicorn The Unicorn from Naot runs as a Narrow to Medium Width. , Valentino Orange Rockstud City Strap Low Block Heel Sandals 36.5 Pumps , LADY Giuseppe Zanotti Grey Suade Sandals Different styles and styles , Nike Black Metallic Silver Free 5.0 Tr Fit Sneakers , WOMEN Tory Burch Joelle Platforms The highest quality material , Ladies Lucky Brand Orange Cork Wedges Charming design , WOMEN Dolce&Gabbana Anguilla Nero Pumps Qualified production
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.