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.Juicy Couture Ankle Boot - Women Juicy Couture Ankle Boots online on YOOX United Kingdom - 11537467AU , Maison Margiela Ankle Boot - Women Maison Margiela Ankle Boots online on YOOX United Kingdom - 11492835FC , Adidas Originals Campus - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11496736JO , Leather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11532050IP , Casadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11309100EQSOTOALTO Montpellier BOTíN PLANO DE MUJER , JUNGLA 6885 WEDGE-HEEL SANDALS FOR WOMEN , Drkshdw By Rick Owens Boots - Women Drkshdw By Rick Owens Boots online on YOOX United Kingdom - 11502871NOJil Sander Navy Ankle Boot - Women Jil Sander Navy Ankle Boots online on YOOX United Kingdom - 11268041XMWomen's Prada Black Mules Leather Sandals Nice and charming , CONVERSE Conv M9007c FASHION FOOTWEAR FOR WOMENGIOSEPPO 45156 ZAPATO DE FIESTA PARA MUJERmens/womens Hush Puppies Proud Overton Boots cheapermen's/women's Not Rated Lynn Boots Good qualityRight Bank Shoe Co? Owen DriverAdidas Puma BOW - Slip-ons - elephant skin/silver cloud , Adidas Puma VIKKY PLATFORM RIBBON - Trainers - whitemen/women ECCO Findlay Plain Toe Tie Oxfords Good market , Jeffrey Campbell RAIDER - High heeled boots Colour: redNapapijri LIDO SPORT - Walking sandals Colour: army green , men/women ECCO Soft 5 Slip-On Loafers High gradeAdno® Sneakers - Men Adno® Sneakers online on YOOX United Kingdom - 11479802MDadidas Originals | adidas Originals Superstar Sneakers With Leopard Print TrimAdidas adidas Originals NMD_R1 - Trainers - aero blue/footwear whitePrada Sport Sneakers - Men Prada Sport Sneakers online on YOOX United Kingdom - 11465027OM , Cuplé Ankle Boot - Women Cuplé Ankle Boots online on YOOX United Kingdom - 11543051PAi7PAW6hr Teva Arrowood 2 Mid WP , Elegant and stable packaging Reef Cushion Bounce Swing , Beautiful and charming Mizuno Dominant IC Mid , 1.STATE Lexey Show off your moxie in these 1.STATE Lexey booties ,
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.