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.Ermanno Scervino Ankle Boot - Women Ermanno Scervino Ankle Boots online on YOOX United Kingdom - 11452089JWVic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11017728PFMerrell Trail Glove 4 Knit WoolLiu •Jo Shoes Ankle Boot - Women Liu •Jo Shoes Ankle Boots online on YOOX United Kingdom - 11329299GV , SEjzk4w7 men's/women's Clergerie Abricet Heels uniqueAdidas Originals Eqt Support Adv Wint - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11387734DTDibrera By Paolo Zanoli Boots - Women Dibrera By Paolo Zanoli Boots online on YOOX United Kingdom - 11446762CR181 By Alberto Gozzi Sneakers - Women 181 By Alberto Gozzi Sneakers online on YOOX United Kingdom - 11455393XAAdidas H?gl Wedge boots - black , mens/womens Haflinger Gina Sandals Preferred materialBirkenstock ARIZONA - Slippers Colour: khakiAdidas Pier One High heeled boots - dark blueman/woman Tata Italia Trainers Colour: black Reasonable priceCasadei Court - Women Casadei Courts online on YOOX United Kingdom - 11542717VV , Moschino Sneakers - Men Moschino Sneakers online on YOOX United Kingdom - 11490487LVVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11478032GM , Converse ONE STAR - OX PINESTRIPE - Trainers Colour: paradise pink/geranium pink/whitemen/women Steve Madden Wexler Sneakers & Athletic Steve Madden Onlinemen's/women's SeaVees 08/63 Hermosa Varsity Sneakers & Athletic SeaVees auctionKeys Sandals - Women Keys Sandals online on YOOX United Kingdom - 11551502GFBallin Court - Women Ballin Courts online on YOOX United Kingdom - 11432397FW , Del Carlo Sandals - Women Del Carlo Sandals online on YOOX United Kingdom - 11425955LA , SbUHHC6a Dr. Martens 1461 Emboss Core , DuGHwpqw woman Floral Pumps Immediate deliverysell PUMA Golf Summercat Sport , Packaging diversity Dunham 8000 Mid BootRich design Sam Edelman FeliciaNike Multi-color Roshe One Premium Plus Casual Camouflage Prints New Sneakers , Ladies Christian Louboutin Metallic Gray Platforms Different stylesWOMENS CYDWOQ Mid Blue 40 Sandals Authentic guarantee
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.