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.Veronique Branquinho Ankle Boot - Women Veronique Branquinho Ankle Boots online on YOOX United Kingdom - 11464054RXConverse All Star Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11190737TT , Griff Italia Sandals - Women Griff Italia Sandals online on YOOX United Kingdom - 11381247PESTROVER 16302 FASHION LOAFERS FOR WOMEN , Jimmy Choo Orange Suede Jimmy-choo-orange-suede-slingback-sandals-w-pink-gold-metallic-accent Sandals , Converse ALL STAR DAINTY OX Silver , SJP by Sarah Jessica Parker Gold Fawn Crackle 39/ Pumps , MTNG 50021 C35921 Cuero WEDGE-HEEL ESPADRILLES FOR WOMEN , Steve Madden Nude Silly Blush Patent M Sandals , womens Gianni Bini Neverfull Sandals Order welcomeTory Burch Laila 2 Driver BalletReebok WORK N CUSHION 3.0 - Neutral running shoes , men's/women's Nine West Oriona D'Orsay Flat Flats Great choice , man/woman Florsheim Burbank Bike Toe Oxford Oxfords Global sales , Millet SUPER TRIDENT GTX - Climbing shoes Colour: red , Camper PEUP - High-top trainers - blackBarracuda Boots - Men Barracuda Boots online on YOOX United Kingdom - 11532063QNRoberto Cavalli Loafers - Men Roberto Cavalli Loafers online on YOOX United Kingdom - 11517351QQmens/womens Under Armour UA Hammer MC Sneakers & Athletic Under Armour International choiceHogan Sandals - Women Hogan Sandals online on YOOX United Kingdom - 11180012KF , Fabi Ankle Boot - Women Fabi Ankle Boots online on YOOX United Kingdom - 11304152ND , Stella Luna Court - Women Stella Luna Courts online on YOOX United Kingdom - 11539315WN , Emanuela Passeri Court - Women Emanuela Passeri Courts online on YOOX United Kingdom - 11564613JHStrategia Ballet Flats - Women Strategia Ballet Flats online on YOOX United Kingdom - 11393532UO , Maison Margiela Sandals - Women Maison Margiela Sandals online on YOOX United Kingdom - 11403394MP3UXlmFtp Tory Burch Shelby 50mm BootieXYMvuATB GEOX D828lc-geox ZAPATILLA CON PLATAFORMA , Upper material Lucky Brand AzoolaWomen's Christian Louboutin Black Peep-toe Sandals Elegant and robust packaging , Women's Christian Louboutin Multicolor Sandals Order welcome ,
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.