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.Lola Cruz Ankle Boot - Women Lola Cruz Ankle Boots online on YOOX United Kingdom - 11472070CC , Alberto Guardiani Ankle Boot - Women Alberto Guardiani Ankle Boots online on YOOX United Kingdom - 11368013OE , Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11275969HCErmanno Scervino Ankle Boot - Women Ermanno Scervino Ankle Boots online on YOOX United Kingdom - 11535367PF , Gianni Marra Ankle Boot - Women Gianni Marra Ankle Boots online on YOOX United Kingdom - 11543343OM , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11523064BL , Paule Ka Court - Women Paule Ka Courts online on YOOX United Kingdom - 11474509AU , Nike Silver Air Max 97 Sneakers , Donald J. Pliner Black Brown Sandals , Twin-Set Simona Barbieri Sandals - Women Twin-Set Simona Barbieri Sandals online on YOOX United Kingdom - 11225497UH+ Melissa Luxury Shoes Baja East + Cosmic Python , womens Anne Michelle Gold Formal Shoes Lush design , STONEFLY Face 9 LOW-TOP TRAINERS FOR WOMEN , WOMENS Lilly Pulitzer Pink Wedges Bestsellers worldwide , Vagabond | Vagabond Casey flatform sneaker , River Island Ballet pumps Colour: black , man/woman Geox Donna Mariele Mid 8 Heels Lightweight shoes , men/women Frye Anna Mid Pull On Boots delicateman/woman Cole Haan Bayleen Sandal II Sandals Non-slip , Santoni Court - Women Santoni Courts online on YOOX United Kingdom - 11513762IODavidson Boots - Men Davidson Boots online on YOOX United Kingdom - 11509989BUmen/women Ben Sherman Madison Perf Sneakers & Athletic Ben Sherman Order welcome , man/woman 361 Degrees Sensation 2 Sneakers & Athletic 361 Degrees best sellerMen/Women Kenneth Cole Reaction Desert Sun Boots Diversified new design , Asfvlt Sneakers - Women Asfvlt Sneakers online on YOOX United Kingdom - 11506988GJPinko Court - Women Pinko Courts online on YOOX United Kingdom - 11554019AM , Le Capricciose® Sandals - Women Le Capricciose® Sandals online on YOOX United Kingdom - 11454157CHBalenciaga Orange Gray Tess Gomma 36 White Trainers Sneakers A118 Sneakers , MISS Saint Laurent Blac Leather Sandals Attractive fashion , WOMENS Prada Silver Brogue Wedges 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.