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 - 11307613RD , Roger Vivier Ankle Boot - Women Roger Vivier Ankle Boots online on YOOX United Kingdom - 11319562AT , MISS Skechers Black Shape-ups Sneakers brand , Drkshdw By Rick Owens Sneakers - Men Drkshdw By Rick Owens Sneakers online on YOOX United Kingdom - 11488711WQ , WOMEN Manolo Blahnik Brown Sandals High quality products , man/woman Spring Step Fabrice Boots professional designLeather wedge-heel mules , camel, Anne WeyburnJerusalem Sandals Sunset Blvd - Antika Collectionmen's/women's Vince Caelan Sandals New styleMaypearl rayna leather ankle boots , black, Clarkscamel active LAPONIA - Trainers - moccaButtero® Sneakers - Men Buttero® Sneakers online on YOOX United Kingdom - 11388548AOA.Testoni Boots - Men A.Testoni Boots online on YOOX United Kingdom - 11353657HWHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11298022XEMen/Women Steve Madden Vantage Sneakers & Athletic Steve Madden Outstanding stylemen's/women's Yellow Box P-Nadie Heels Every item described is availableNike SB AIR MAX BRUIN VPR TXT - Trainers - red crush/black/white/yellow ochre , Parlanti Loafers - Women Parlanti Loafers online on YOOX United Kingdom - 11399860PBBallin Court - Women Ballin Courts online on YOOX United Kingdom - 11360222CP , Méliné Sneakers - Women Méliné Sneakers online on YOOX United Kingdom - 11514599WJWalter Violet Court - Women Walter Violet Courts online on YOOX United Kingdom - 11501971AS , Toni Pons Espadrilles - Women Toni Pons Espadrilles online on YOOX United Kingdom - 11376114VW , Le Silla Sandals - Women Le Silla Sandals online on YOOX United Kingdom - 11395327PH , Moma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11508476BKPantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11575994WBAdidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11561864BMBuscemi Black 100mm Sneaker 22mr0212 Sneakers , New Listing Steve Madden DollyMedium cost Soft Style Vivid , WOMEN FLY London Black Yman Wedges Really ,
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.