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.Rag & Bone Loafers - Women Rag & Bone Loafers online on YOOX United Kingdom - 11293427IF , Nina Ricci Court - Women Nina Ricci Courts online on YOOX United Kingdom - 11488429SPMaritan G Sneakers - Women Maritan G Sneakers online on YOOX United Kingdom - 11493463HH , Vince Camuto Sandals - Women Vince Camuto Sandals online on YOOX United Kingdom - 11404896BGChooka Versa Wide Calf Tall Boot , HISPANITAS Hi87444-hispanitas THIGH BOOTS FOR WOMENwoman Clarks Tan/Brown Artisan Wedges ComfortJanet & Janet Ankle Boot - Women Janet & Janet Ankle Boots online on YOOX United Kingdom - 11310940WHE8 By Miista Adeline - Sandals - Women E8 By Miista Sandals online on YOOX United Kingdom - 11469756GTNike Air Max 1 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11442157WFmen/women Chinese Laundry Moto Heels Long-term reputation , men/women Aerosoles Mid Level Heels Modern mode , Tommy essential trainers , white, Tommy Hilfiger , men/women Splendid Bowen Sandals Fashion patternAdidas Tosca Blu KIRUNA - Cowboy/Biker boots - nero , adidas Performance BARRICADE 2018 - Multicourt shoes - hiPinko NOCCIOLA DECOLLETE - Classic heelsAlaïa Sandals - Women Alaïa Sandals online on YOOX United Kingdom - 11146576BQSantoni Loafers - Women Santoni Loafers online on YOOX United Kingdom - 11371569QHCappelletti Loafers - Women Cappelletti Loafers online on YOOX United Kingdom - 11494459SMValleverde Loafers - Women Valleverde Loafers online on YOOX United Kingdom - 11553057PQAlbano Ankle Boot - Women Albano Ankle Boots online on YOOX United Kingdom - 11517160VCButtero® Ankle Boot - Women Buttero® Ankle Boots online on YOOX United Kingdom - 11166971LP , Divine Follie Sandals - Women Divine Follie Sandals online on YOOX United Kingdom - 11570760TK , Alexander Wang Espadrilles - Women Alexander Wang Espadrilles online on YOOX United Kingdom - 11385244EI , Chiara Ferragni Court - Women Chiara Ferragni Courts online on YOOX United Kingdom - 11550665GO , woman SCHUTZ Tan Wedges To adoptTrask Paige Start your summer off on the right foot with the chic Paige slip-on by Trask! , Kamik Shellback Enjoy total weather protection with the Kamik Shellback boot , womens DKNY Blac Foundation Sneakers Strong heat and heat resistance
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.