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.Akhal Tekè Ballet Flats - Women Akhal Tekè Ballet Flats online on YOOX United Kingdom - 11391542JA , Via Vela 14 Open-Toe Mules - Women Via Vela 14 Open-Toe Mules online on YOOX United Kingdom - 11542674CEBactá Dei Toi Ankle Boot - Women Bactá Dei Toi Ankle Boots online on YOOX United Kingdom - 11516981FVPONS QUINTANA 6772 WEDGE-HEEL SANDALS FOR WOMENLADY Stuart Weitzman Multicolor Wedges Year-end salesmens/womens Gravati Kiltie Loafer Loafers Direct business , men's/women's Athena Alexander Cushe Heels quality , men/women Aquatalia Ulyssaa Boots Best-selling worldwide , Pureboost x element running shoes , navy blue, Adidas OriginalsAdidas Royal RepubliQ BORDER LOAFER - Slip-ons - blackmen/women Adidas Women's Alphabounce Beyond Shoes Schuhe Brand feastTommy Hilfiger LOVES BEACH - T-bar sandals Colour: blue , man/woman Circus by Sam Edelman Jilly-4 Slippers sell , men's/women's BOBS from SKECHERS Super Plush Loafers Brand , Yuketen Boots - Men Yuketen Boots online on YOOX United Kingdom - 11466346TR , Arfango Loafers - Men Arfango Loafers online on YOOX United Kingdom - 11419151FCASICS GEL-QUANTUM 360 4 - Neutral running shoes - dark grey/black , men/women A2 by Aerosoles Make Way Heels Various types and stylesKurt Geiger London | Kurt Geiger White Leather Circle Buckle LoafersAdidas Puma BASKET PLATFORM TRACE - Trainers - dusty coral/white , Adidas Selected Femme SFMERLE - Sandals - dark sapphireadidas Performance PREDATOR 18.2 FG - Moulded stud football boots - core black/footwear white/redCecconello Sandals - Women Cecconello Sandals online on YOOX United Kingdom - 11253300KNKat Maconie Loafers - Women Kat Maconie Loafers online on YOOX United Kingdom - 11501397AT , Alberto Guardiani Sandals - Women Alberto Guardiani Sandals online on YOOX United Kingdom - 11426346CE , OspAy6wv LOVE Moschino Faux Fur Mulet1R0t1y1 Crocs Classic Realree Edge ClogBEmZn6HD ALBANO 6035 SHOES FOR WOMENNaot Kawaka The Kawaka is from the Naot Koru Collection, which runs as a Medium width. , women Tory Burch Tan Cami Wedges From the latest model ,
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.