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.Rodolphe Menudier Sandals - Women Rodolphe Menudier Sandals online on YOOX United Kingdom - 11015007HQ , Alberto Venturini Sneakers - Women Alberto Venturini Sneakers online on YOOX United Kingdom - 11221701DN , Christian Louboutin Black Signature Sneak In Flat Calf Leather Cross Strap Sneakers 40 7.5 SneakersRS-0 SOUND Men's Sneakers | Puma Black | PUMA RS-0 | PUMA United States , Jolie By Edward Spiers Ankle Boot - Women Jolie By Edward Spiers Ankle Boots online on YOOX United Kingdom - 11337722AB , ladies Volatile Tan Island 2 Sandals The newest stylemen's/women's Allen Edmonds Carlyle Oxfords reasonable price , man/woman Clarks Clarkdale Jean Boots realMarco Tozzi High heels Colour: blackHYMN CHELSEA - Classic ankle boots - navy , Nike Performance METCON 4 - Sports shoes - universal red/black/white , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11335331IHGuess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11521610UD , Shoto Ankle Boot - Women Shoto Ankle Boots online on YOOX United Kingdom - 11053562PDLeather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11385045LF , Jeffrey Campbell Court - Women Jeffrey Campbell Courts online on YOOX United Kingdom - 11467114WX , Gioseppo Flip Flops - Women Gioseppo Flip Flops online on YOOX United Kingdom - 11575945DRStella Mccartney Espadrilles - Women Stella Mccartney Espadrilles online on YOOX United Kingdom - 11178190LV , Hogan Olive Green/Gold Women's Sneaker SneakersCaligarius Cream Snakeskin Slingback Italian Sandals , zlPDw5OE Florsheim Midtown Plain Toe Oxford , cUjvjHzE VIENTY 9396 SHOES FOR WOMENBeautiful Anne Klein Teaser Mule , Mezlan Ulpio Bring dapper style back in the polished Mezlan Ulpio penny loafer , Dolce&Gabbana Red Dolce & Gabanna Patent Kitten Heel Slide SandalsLADY Skechers White Up Leather Sneakers High quality and cheapValentino Rockstud White & Gold Sneaker 37.5 Sneakers , Sasch Black Sas Tripad Comfort Strappy W Sandalslady Rebecca Minkoff Fuschia Pumps Platforms High qualityValentino Camo Rockrunner Camouflage Studded Sneaker Sneakers
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.