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.Donna Più Ankle Boot - Women Donna Più Ankle Boots online on YOOX United Kingdom - 11313586CLBruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11556500NELiu ?Jo Shoes Sneakers - Women Liu ?Jo Shoes Sneakers online on YOOX United Kingdom - 11270171GP , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11315152SE , SJP by Sarah Jessica Parker HitaJanet & Janet Ankle Boot - Women Janet & Janet Ankle Boots online on YOOX United Kingdom - 11049999QRRIVIERABONUCCI Salones Mujer Piel Ja5501g30-rojo Beige SHOES FOR WOMEN , ladies Balmain Purple/Gold Lilea Formal Shoes Bestsellers worldwide , adidas Sneakers By Mary Katrantzou 6.5- Sneakers , Donald J. Pliner Brown/Silver Suede Wooden Sandals , Tiger of Sweden ARNE - TrainersBELSTAFF Ashbridge Soft Suede and Leather Boots , man/woman Born Malang Heels Many varieties , le coq sportif SOLAS PREMIUM - Trainers Colour: triple blackmen/women Hush Puppies Aiden Clever Oxfords Quality products , Furla LADY - Classic ankle boots Colour: onyx , Fabi Loafers - Men Fabi Loafers online on YOOX United Kingdom - 11532115JH , adidas Performance KAISER 5 TEAM TF - Astro turf trainers Colour: black/running whiteMaison Margiela Sneakers - Men Maison Margiela Sneakers online on YOOX United Kingdom - 11353123KJCuoieria Loafers - Women Cuoieria Loafers online on YOOX United Kingdom - 11482714RIGeox Court - Women Geox Courts online on YOOX United Kingdom - 11544726TIDivine Follie Sneakers - Women Divine Follie Sneakers online on YOOX United Kingdom - 11562855LIMulberry Ankle Boot - Women Mulberry Ankle Boots online on YOOX United Kingdom - 11486211IAEmanuélle Vee Sandals - Women Emanuélle Vee Sandals online on YOOX United Kingdom - 11559023CUPedro García Sandals - Women Pedro García Sandals online on YOOX United Kingdom - 11406702RM , cn0TAh0b Birkenstock Birko® Natural Arch SupportSales online store Dan Post Flower Girl , a wide range of products J. Renee Langeley , Women's Steve Madden Black Irenee Sandals new entryValentino Brown Ankle Strap Rockstud Rolling Pumps
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.