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.Liu ?Jo Ankle Boot - Women Liu ?Jo Ankle Boots online on YOOX United Kingdom - 11537714UELeonardo Principi Ankle Boot - Women Leonardo Principi Ankle Boots online on YOOX United Kingdom - 11537282NO , Dolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11273938WWOfficine Creative Italia Loafers - Men Officine Creative Italia Loafers online on YOOX United Kingdom - 11333048UQ , Vans AUTHENTIC MARVEL Marvel / Beige / MulticolourLiu ?Jo Shoes Ballet Flats - Women Liu ?Jo Shoes Ballet Flats online on YOOX United Kingdom - 11031532VI , Adidas Originals Nmd_R2 Pk - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11316329MA , WOMEN Adrienne Vittadini Black Wedge Sandals Good worldwide reputation , PAULA URBAN 47-8303 WEDGE-HEEL SANDALS FOR WOMENLOTTUSSE S 1989 FASHION LOAFERS FOR WOMENBrunello Cucinelli Brown Womens Leather Oxfords Sneakers , WOMEN Prada Turquoise Sandals Popular tide shoesMiss Selfridge KELLY - Over-the-knee boots Colour: blackmens/womens Jessica Simpson Mandalaye Flats Pleasant appearanceWl373gry leather trainers , grey, New Balance , Adidas Dune London KASSIUS - Platform sandals - beigePollini Sandals - Women Pollini Sandals online on YOOX United Kingdom - 11331927FH , mens/womens Emerica The Hsu Low Vulc Sneakers & Athletic Emerica Human border , Keen WANDERER WP - Walking shoes - cascade brown/dark earth , O.X.S. Sneakers - Women O.X.S. Sneakers online on YOOX United Kingdom - 11456508JKTod's Sandals - Women Tod's Sandals online on YOOX United Kingdom - 11299537BJLemaré Sneakers - Women Lemaré Sneakers online on YOOX United Kingdom - 11560321KG , Unisa Ankle Boot - Women Unisa Ankle Boots online on YOOX United Kingdom - 11519585VGCasadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11507903SKBrawn's Ankle Boot - Women Brawn's Ankle Boots online on YOOX United Kingdom - 11526907WK , Pinko Ankle Boot - Women Pinko Ankle Boots online on YOOX United Kingdom - 11215943NFYear-end sale Ted Baker MirobepWomen's Marni Olive Zeppa Wedges Different styles and styles , Burberry Cream/ Blue/ Tan Nova Check Slide Sandals , womens Prada Brown Pointed Pumps Cheap ideal
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.