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.Officine Creative Italia Boots - Men Officine Creative Italia Boots online on YOOX United Kingdom - 11552725MT , Anna F. Court - Women Anna F. Courts online on YOOX United Kingdom - 11328021AX , Henry Beguelin Sandals - Women Henry Beguelin Sandals online on YOOX United Kingdom - 11504064PTKenneth Cole New York Brock OxfordMoon Boot The Original Msgm Boots - Women Moon Boot The Original Msgm Boots online on YOOX United Kingdom - 11489500ACTwin-Set Simona Barbieri Sneakers - Women Twin-Set Simona Barbieri Sneakers online on YOOX United Kingdom - 11037728MGSTOKTON Black Sequoia Studded Skull Leather High Top Sneakers Eur 36 Sneakerslady Emporio Armani Taupe Platforms A balance between toughness and hardnessREFRESH 63828 C Camel FASHION FOOTWEAR FOR WOMEN , MISS Cheetah Print Radcliff Sandals Most economicalman/woman David Tate Madera Heels Packaging diversityRedskins CIZAIN - High-top trainers Colour: cognac/navyAdidas L'INTERVALLE DEENAH - High heels - blush , men/women Nine West Denita 2 Heels Excellent performance , Neoprene running trainers , khaki, La Redoute Collections , Men/Women David Tate Flex Heels Let our products go to the world , mens/womens Born Mimas Sneakers & Athletic Born Very good colorMen/Women To Boot New York Barton Sneakers & Athletic To Boot New York cheap , adidas Performance TERREX TRACEROCKER GTX - Trail running shoes - coreblack/carbon/hi-res orangeVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11437028BI , Kudetà Ankle Boot - Women Kudetà Ankle Boots online on YOOX United Kingdom - 11539790SW , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11560556UWPhilippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11514837FWlady Sam Edelman Sneakers Sale ItalyusP3iLgo Hey Dude Wally L Sox , Beautiful appearance CC Corso Como JackeyElegant and solemn Easy Spirit Loungin 2 , for you to choose Old Gringo ElpisSaint Laurent Blue Ysl Rolling High-top Sneakers Navy Patent Leather Mens 43 Sneakers , Manolo Blahnik Black Pointy Suede Leather Pumps Sandals
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.