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.Yosi Samra Ballet Flats - Women Yosi Samra Ballet Flats online on YOOX United Kingdom - 11253369QO , Bianca Di Ankle Boot - Women Bianca Di Ankle Boots online on YOOX United Kingdom - 11471127IPN'sand® Ankle Boot - Women N'sand® Ankle Boots online on YOOX United Kingdom - 11496387LMGiuseppe Zanotti Brown Leopard New Men Animal Print Calf Hair Leather High-top Sneakers Eu 44 Sneakers , Officine Creative Italia Ankle Boot - Women Officine Creative Italia Ankle Boots online on YOOX United Kingdom - 11513366XV , Liu ?Jo Shoes Sneakers - Women Liu ?Jo Shoes Sneakers online on YOOX United Kingdom - 11534016VS , RIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja5030l96-plateado WEDGE-HEEL SANDALS FOR WOMEN , Women's Newton Turquiose Motion Vi Sneakers Economical and practicalWomen's Stella McCartney Black Wedge Sandals Bright colorsmen/women Tahari Waver Heels renewed on timemen's/women's Steven Aries Clogs & Mules Amoy , Kennel + Schmenger UP - Trainers , man/woman Report Pearlina Heels product qualityDr. Scholl's Granted - Original Collectionmens/womens ECCO Touch 25 Hooded Sandal Heels Easy life , Platform heels, wide fit , indigo blue, Castaluna , Bogner ST. ANTON - Cowboy/Biker boots Colour: blackConverse Sneakers - Men Converse Sneakers online on YOOX United Kingdom - 11028648XP , Santoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11478518OQ , man/woman Via Spiga Caryn Boots The color is very eye-catching , men's/women's Columbia Fluidflex X.S.R. Sneakers & Athletic Columbia Crazy price , Alberto Guardiani Boots - Men Alberto Guardiani Boots online on YOOX United Kingdom - 44920447HN , men's/women's Allrounder by Mephisto Fina Tex Sneakers & Athletic Allrounder by Mephisto Impeccable , Fabi Loafers - Women Fabi Loafers online on YOOX United Kingdom - 11531866XS , Cuplé Ankle Boot - Women Cuplé Ankle Boots online on YOOX United Kingdom - 11541280OC , VDN7w6me STROVER 18392 SHOES FOR WOMEN , adidas White New Women's Advantage Clean Vs Sneaker SneakersLADY Zara Black Platforms a wide range of productsPrada Black Suede Pointed Toe Kitten Heels SandalsLadies Tory Burch Red Gold Sandals Exquisite workmanship
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.